Hawaiʻi's Technology Community

Urgent! Help Stop HB1405 - The Bill That Will Devastate Hawaii's Online Media Industry

I hate to be dramatic but the future of Hawaii's online media industry is in jeopardy and your immediate action is needed. Bill HB1405 is a bill that could cause a huge blow to Hawaii's Online Media Industry. It will handicap Hawaii's Online Media by not allowing them to fully monetize their websites giving an advantage to international and mainland companies and professionals.

Frankly, I am very surprised that there has not been more support against this bill from Hawaii's tech community since it affect so many of us directly or indirectly. Still, I believe an intelligent social network like the will take action and educate themselves on the implications of HB1405.

For those of you that want to learn more about HB1405 I have created a quick FAQ.

1. What is HB1405 and how will the bill affect Hawaii's Online Media Industry?
The bill will require any online merchant (,, etc) that has affiliates in Hawaii to pay Hawaii sales tax. Meaning if has affiliates in Hawaii they must then charge Hawaii residents 4.5% sales tax on all their purchases.

Currently and almost all other merchants do not charge sales tax on items sold to Hawaii residents. If this bill were to pass they would have to charge sales tax if they have affiliates. To avoid this tax many merchants such as will just dump all their Hawaii affiliates and advertising contracts with Hawaii residents. By doing this they won't have Hawaii affiliates and will not have to charge Hawaii state tax.

As you can see this is a not a good bill because what ends up happening is Hawaii will still not get their sales tax and on top of that they hurt Hawaii affiliates by getting them kicked off advertising network such as, Linkshare and Commision Junction.

Troy Fujimoto the New Media Director of the Star Bulletin website strongly agrees this is a very bad bill to Hawaii Media Industry.

2. Why this has a negative affect on Hawaii's growing online media industry.
This bill handicaps Hawaii's online media companies because they won't be able to fully monetize their websites, blogs or catalogs because they will be banned from so many advertisers. This give companies or websites from other states or countries a huge advantage over Hawaii's online media companies.

Online media is a rapidly growing industry and believe Hawaii should be a part of this growth. Especially with the downturn in tourism. This type of industry is something Hawaii should promote not try to kill off. On top of that online media is a low impact industry that for the most part brings money into the state.

3. If this bill is so bad why has this bill passed the House & Senate?
Hawaii and many other states are having budget gaps to fill and they see this as a way to collect more taxes. Unfortunately I believe Hawaii will not get the taxes they think they will get because merchants such as will just kick off Hawaii affiliates and not have to pay sales tax. Also there is a huge hidden cost that the House and Senate did not see which is the indirect effect of Hawaii Online Media Industry.

Again, I was very surprised that very few Hawaii online publishers know about this bill. Also, I think no one in Hawaii has really taken a leadership role in informing and uniting fellow Hawaii techies. Because of that the House & Senate did not feel any pressure to vote against this bill.

The bill has already passed the House and Senate and will go into law this summer unless Linda Lingle vetos the bill. As I write this we have only about 2 more week to act.

4. How urgent is action needed?
I met with Senator Fukunaga and a lobbyist from today. They are also against this bill and feel strongly that Hawaii's online community must unite and take action in order to prevent this bill from passing. The time table is very short. We have only 2 weeks to move.

5. Ok, I understand this bill negatively affect Hawaii's online media. What can I do?
The first thing to do is to better inform yourself on the implications of the bill. Next you should contact anyone you think might be affected by this bill.

You should also send an email to Linda Lingle or even media outlets such as Honolulu Advertiser or Star Bulletin (Letters to the Editor). You can easily do this online and it only takes about 5 minutes.

Email template for email to Linda Lingle

Linda Lingle's email address:

Another important step is to organize so our voices can be heard. I have created a Ning page to help organize our efforts. Please join the discussion.

I will be meeting with Linda Lingle or one of her advisers in the next 2 weeks if anyone is interested in attending please let me know.

I have dedicated a great deal of focus and energy on this issue because I feel very strongly about the negative impact this bill has on our Hawaii tech community. If you believe this is bill is not good for Hawaii then I urge you to take action.

Mahalo for your time and effort,
Dean Takamine

Feel free to contact me if you have any questions or comments.

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Comment by Truman Leung on July 23, 2009 at 12:53pm
Have any of you who had relied on Amazon Affiliate income in your business decided, because of being unceremoniously dropped by Amazon due to forces out of your control, to rethink their business model away from affiliate advertising to other methods of monetizing your website?
Comment by Curtis J. Kropar on July 23, 2009 at 12:46pm
I am curious if there is new language in their agreements or new structures to payments or anything else... any substantial changes or if its just "welcome back ! Here is where we left off !"
Comment by Haken Pax on July 23, 2009 at 8:52am
Hawaii Amazon Associates have been invited to re-enroll. Got this last night:

Dear Amazon Associate:

Earlier this month, Governor Linda Lingle vetoed the unconstitutional tax collection scheme passed by the Hawaii legislature in HB 1405. Because the effective date of that bill preceded both her veto and the legislature's veto override session, we had little choice but to end our advertising relationships with all Hawaii-based participants in the Amazon Associates Program. Now that the override session is over, and the legislature did not override Governor Lingle's veto of HB 1405, we would like to invite all Hawaii Associates whose accounts were closed due to the pending legislation to re-enroll in the Associates Program.

To do so, please click here. When asked to sign in, please use the same account username and password that were previously associated with your Associates account. To make your return to the Program as seamless as possible, when you re-enroll, your account information (login, store-ID, etc.) will be the same as it was prior to termination. For further information about re-enrollment, please click here for FAQs.

We appreciate your patience during this time and hope that you will re-enroll in the Associates Program. We look forward to working with you and other Hawaii-based Associates again. Please feel free to contact us with any questions or concerns.

Best Regards,

The Amazon Associates Team
Comment by Dean Takamine on July 15, 2009 at 8:33pm
Thanks Daniel, TechHui was a big help. It was disappointing to see SB199 pass.

Also, Governor Lingle vetoed Hawaii Bill SB1678 but it was just overridden by the Senate. This bill is also known as the Online Streamline Tax Bill. Hawaii will now join other states in implementing a nationwide online tax. It won't effect online GE tax to Hawaii residents immediately but paves the way towards an online GE tax for Hawaii and the rest of the US. Yes, more taxes are coming.
Comment by Daniel Leuck on July 15, 2009 at 6:28pm
Dean - Mahalo for your great work raising awareness of this bill and organizing an effort to get it vetoed.
Comment by Dean Takamine on July 15, 2009 at 1:02pm
I just got news from Senator Fukunaga that it is official. The Senate President has just filed Gov Veto Msg 786 during our floor votes, which means that HB 1405 has not been overriden.

This is great news. Thank you to everyone. We will have to watch out for a similar bill next year.

Comment by Todd Cochrane on July 1, 2009 at 9:54pm
One can only hope.. But a lot of damage has already been done.
Comment by Ryan on July 1, 2009 at 7:34pm
Derek DePledge, the Honolulu Advertiser political reporter, says on Twitter that: "Gov. Lingle's veto of Internet tax will likely stand; state House will not override because of a technical flaw in title and other concerns."
Comment by Bruce M. Bird on July 1, 2009 at 4:24pm
Hi, Dean. My sense is that (and other interested out-of-state retailers) will wait to reinstate their contracts with their Hawaii affiliates until after the Legislature convenes on July 15, 2009, and decides whether or not to override Governor Lingle's veto.
Comment by Dean Takamine on July 1, 2009 at 4:02pm
This immediate veto means that and others will have an official document to refer to; now we have to make sure that the House and Senate indicate that they are not likely to override. Once that is in place I believe and other merchants would reinstate their contracts with Hawaii affiliates.


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