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 TechHui.com 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 (Amazon.com, Buy.com, etc) that has affiliates in Hawaii to pay Hawaii sales tax. Meaning if Amazon.com has affiliates in Hawaii they must then charge Hawaii residents 4.5% sales tax on all their purchases.
Currently Amazon.com 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 Amazon.com 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 Amazon.com, 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 Amazon.com 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 Amaazon.com 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: firstname.lastname@example.org
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,
Feel free to contact me if you have any questions or comments.