TechHui

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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 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: governor.lingle@hawaii.gov

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.

http://hawaiiaffiliatetax.ning.com/

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 Ryan on July 1, 2009 at 3:47pm
Vetoed:

Governor Linda Lingle vetoed HB 1405 today because this legislation has immediate and adverse consequences for residents and businesses of Hawai‘i. This legislation would place Hawai‘i companies at a competitive disadvantage. As a consequence of this bill, Hawai‘i businesses would no longer be able to receive commissions for advertisements on their website that link to numerous national and international firms that offer goods and services to Hawai‘i residents.

Already Amazon.com and Overstock.com have officially sent out notification that they are severing their “affiliate” relationships with Hawai‘i. Other well known internet-based firms, such as eBay are likely to do the same if prompt action is not taken. Hawai‘i residents can still order directly through these online retailers’ websites.

“I am vetoing this bill immediately to help ensure Hawai‘i is not economically hurt by legislation that was not well thought-out and would have negative consequences for non-profits such as the University of Hawai‘i bookstore, and businesses throughout our State,” Governor Lingle said. “I am hopeful by vetoing this bill that mainland-based companies will promptly restore their relationships with our State.”

The Attorney General found that HB 1405 HD2 SD2 CD1 may be legally defective in that it may violate Article III, Section 14 of the Hawai‘i State Constitution. This Article provides that each law shall embrace only one subject which shall be expressed in its title. The scope of HB 1405 may be broader than its title indicates and thus the legislation may not meet the constitutional test.

“We are hopeful the Legislature will recognize this legal flaw and not act to overturn my decision to veto this measure,” Governor Lingle added.

The Legislature can convene on July 15, 2009 to determine if they will sustain or override the Governor’s actions on any measures she vetoes between July 1, 2009 and July 15, 2009. On June 30, 2009 the Governor issued a list of 65 bills passed during the 2009 Legislative session that she is reviewing for potential veto action. This is one of those bills.
Comment by Daniel Leuck on June 30, 2009 at 5:14pm
I see SB199 in there as well.
Comment by Troy Fujimoto on June 30, 2009 at 5:14pm
HB1405 - has an update - Notice of Intent to veto dated 06-30-09 (Gov. Msg. No. 781)
http://www.capitol.hawaii.gov/session2009/lists/measure_indiv.aspx?billtype=HB&billnumber=1405

SB1678 - Notice of Intent to veto dated 06-30-09 (Gov. Msg. No. 781)
http://www.capitol.hawaii.gov/session2009/lists/measure_indiv.aspx?billtype=SB&billnumber=1678
Comment by Truman Leung on June 30, 2009 at 5:05pm
Great news! Thanks, Paul.
Comment by Dean Takamine on June 30, 2009 at 5:04pm
Yes, this is good news for Hawaii. It looks like HB1405 will be vetoed by the Governor along with SB1678 the Streamline Sales Tax.

Still, we will want to make sure the House and Senate does not override her veto like they did with the Income and Hotel tax increases. We still need to let our representatives know the effects of these bills.

Thanks to TechHui for featuring this posting. This is Web 2.0 at its best. Thanks to everyone that commented to this post. Also thank you to everyone that wrote emails and made phone calls. I will still be following this bill and keep everyone informed.

Again, please let your representatives know about the effects of this bill.
Comment by Paul Graydon on June 30, 2009 at 4:53pm
Some good news, it looks like HB1405 is amongst the list of legislation Lingle is going to veto. Full list here (in pdf form)
http://www.hawaiisenatemajority.com/wp-content/upLoads/2009/06/govs-veto-list.pdf
Comment by Scott Yoshinaga on June 30, 2009 at 10:52am
For those following this in the news, from Star-Bulletin.com Breaking news:
http://www.starbulletin.com/news/breaking/49531647.html
Comment by Daniel Leuck on June 30, 2009 at 6:11am
Governor Lingle represents the people of Hawaii. I recommend writing her a personal email explaining how it affects you, a state resident. A single personal email explaining the impact on you (or your customers) will have more impact than a flood of emails from people in California. If a thousand people from out of state send her form emails it will drown out the more effective personal notes from state residents.
Can anyone email her or just the people from within the State? I have thousands of people outside of the state who will email her if I ask.
Comment by Eric Nakagawa on June 29, 2009 at 11:57pm
Well, Amazon is dropping a heavy fist to see if people will rally and get this bill vetoed.

Since this affect EVERY online retailer (all of whom use affiliate networks to sell their products) they will now lose more tax revenue doing the exact opposite of the bills intentions.

From the Retailer/Servicer end I'm sad to have to completely remove Hawaii residents from our affiliate network.
Comment by Curtis J. Kropar on June 29, 2009 at 11:48pm
Comment by Haken Pax
"Can anyone email her or just the people from within the State? I have thousands of people outside of the state who will email her if I ask. "

Anyone can email her. If you have an Amazon account, living here.. and your thousands of people go to amazon through your link and buy something, Amazon would be required to collect tax from them. regardless of where they live. IF i understand it properly.

If your

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