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

Comment

Comment by Curtis J. Kropar on June 15, 2009 at 10:45am

Dean,

By the way.. thanks for bringing this up and posting it for everyone to see.

Everyone, this type of activity goes on every day at the capitol. Every day we are subjected to the introduction of new laws and rules that can have a drastic negative impact on us. For the most part, the average person is simply too bogged down in daily survival mode to even pay attention to what the legislators are doing.

Dean made the statement:
"Frankly, I am very surprised that there has not been more support against this bill from Hawaii's tech community"

Yes, that's the point. We are so busy trying to get ahead and survive, most of us are simply not paying attention.

Dean also made the statement
"Personally, I am not a political person but this bill has forced me to inform myself on the issues."

We all need to do this more often.

Everyone here knows that I work with the homeless and other non profit orgs. Much like the Tech Hui, we have an organization called PIC (Partners In Care) that is made up of roughly 90+ non profit orgs, plus city and state offices. I am chair of their IT committee. Because of all of the various forms of legislation that were getting introduced that can drastically and negatively impact the homeless, PIC found it necessary to form an "Advocacy" committee. The primary function of this committee is to monitor what bills and laws are being introduced at the capitol and the city so that we don't get blindsided by something.

For Instance :
Did you know that non profit orgs pay taxes here in hawaii ????
Senate Bill SB354 would Exempt the general excise tax rate for fundraising activities by charitable organizations.

http://www.capitol.hawaii.gov/session2009/lists/measure_indiv.aspx?billtype=SB&billnumber=354
http://www.capitol.hawaii.gov/session2009/bills/SB354_.htm

it was "deferred" which basically means its dead.
So if a non profit does fundraising to buy food to hand out at a food bank. The state wants part of the money. If a non profit does fundraising to buy books to teach kids how to read. yep, state wants part of that money too.

We all need to monitor the capitol more often and more closely.

Thanks DEAN !!!!

Comment by Daniel Leuck on June 15, 2009 at 9:00am

I think what frustrates the local travel company owner who responded to Ryan's blog is that he is under the impression that running a successful affiliate site requires nothing more than "…sticking code in their sites and doing nothing." Being a successful affiliate requires significant investment in generating fresh content, building features, SEO and other forms of marketing. He also implies that agencies are the only ones employing "real people". The larger sites have employees, and they pay other companies with employees to build features.

That being said, I sympathize with Bruce's situation. I think we should be campaigning to lower his taxes rather than raising others. A high GE tax is a bad move for all businesses for myriad reasons, some of which Joel enumerated in his response to this post.

Again, the best way to increase tax revenue is by making Hawaii a more appealing place to visit and do business. Raising taxes, especially taxes on revenue, is a knee jerk reaction that will undoubtedly be deleterious to the fiscal health of our state.

Comment by John on June 14, 2009 at 8:50pm

The comment in favor of HB1405 on Ryan's blog post is interesting. The commenter is a local travel company and he pays GET, likely putting him a material disadvantage (given the tight margins I assume in this business).

Are local (bricks and mortar) companies lobbying the state government on this?

Also, this commenter is a good example of why opposition to HB1405 should be framed as support of SSTP as a better alternative to HB1405.

Comment by Curtis J. Kropar on June 14, 2009 at 8:43pm

Um....
did you guys read this line ?
"Alternatively, Hawaii should be able to obtain the names of the purchasers from the out of state vendor and send assessments to Hawaii residents."

in : http://www.capitol.hawaii.gov/session2009/Testimony/HB1405_Testimony_EDT_03-20-09.pdf
Page 8.

Comment by Ryan on June 14, 2009 at 7:33pm

Thanks for the head's up, Dean. After your meeting with Sen. Fukunaga, she also sent an e-mail out to some local tech folks. I blogged about HB1405 this afternoon, quoting a couple of people here. Interestingly, my first comment is from someone who thinks HB1405 is a good thing. At least the conversation is happening.

Comment by Dean Takamine on June 14, 2009 at 4:08pm

Dave is correct this bill certainly would not only affect Hawaii's online media but just about every industry directly or indirectly. Given the current state of the economy this would only add salt to the wound.

Hawaii's online media is a clean industry. It is low impact and brings in most of it's money from out-of-state. It is also one of the fastest growing industries and has tremendous potential. This is an industry Hawaii should be promoting not trying to destroy.

I also agree with Troy that Bill SB1678 would be a much better alternative to HB1405.

Comment by Dave Zuls on June 13, 2009 at 11:57pm

Its not just Amazon, Ebay and Hawaiian Airlines... Just about every major Airline, Hotel Chain, Rental Car agency and Online Travel Agency like Expedia and Travelocity have affiliate programs that Hawaii residents might not be able to participate with.

It's not just the travel industry. There are tens of thousands of affiliate programs out there for almost every industry you can think of. (If its a major brand and they sell stuff online, they probably have an affiliate program to help increase web sales)

Comment by Troy Fujimoto on June 13, 2009 at 11:27pm

John has the right idea on advocating Streamlined Sales Tax Project, which has also been passed by the House & Senate and has been submitted to Governor Lingle.

Senate Bill - SB1678 Adopts amendments to Hawaii tax laws to implement the streamlined sales and use tax agreement. Effective when the United States Congress enacts legislation by consenting to the Streamlined Sales and Use Tax Agreement. (CD1) http://www.capitol.hawaii.gov/session2009/lists/measure_indiv.aspx?...

If SB1678 passes Hawaii would join 19 other states that have become members of the Streamlined Sales Tax Project. The project works with participating states to simplify their tax laws in an effort to make it easier for Internet and catalog retailers to process sales tax. The goal of the SSTP is to win support in the U.S. Congress for a new federal law that would require all Internet and catalog merchants to collect sales tax on all orders, regardless of whether they have a physical presence in a customer’s state.

With SB1678 passing, Hawaii would not be collecting sales tax (GET), until the Streamlined Sales tax is passed as a federal law. Hawaii residents would only have to pay the GET once everyone else has to.

Versus, with HB1405 passing, companies like Amazon.com would drop all Hawaii affiliate program participants to avoid the obligation of collecting the GET.
Or say what if Amazon.com does decide to keep Hawaii affiliates. Hawaii residents would now have GET added to their amazon orders.

HB1405 would take effect July 1, 2009 VS. SB1678 would take effect once a federal law is in place.

Advocating Streamlined Sales Tax Project (SB1678) would be the best tactical solution as John has stated.

NYAffilaiteVoice - has a post asking Will Hawaii Governor Sign HB1405

Comment by Troy Fujimoto on June 13, 2009 at 10:29pm

Hey Eric - HB1405 considers

"The sale of tangible personal property by a person soliciting business through an independent contractor or other representative if the person enters into an agreement with a resident of this state under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link on an Internet website or otherwise, to the person, and if the cumulative gross receipts from sales by the person to customers in the state who are referred to the person by such a resident, is at least $10,000 in the twelve-month period ending on the last day of the most recent calendar quarter before the calendar quarter in which the sale is made." - http://www.capitol.hawaii.gov/session2009/Bills/HB1405_CD1_.HTM

as engaging in business, thus forming a nexus (link or connection) to Hawaii GET.


That definition seems to cover any form of advertising which leads to a sale of a tangible personal property.

Comment by Dean Takamine on June 13, 2009 at 5:08pm

See attached file for a sample email template. You can send to Linda Lingle: governor.lingle@hawaii.gov
SAMPLE LTR Template-HB 1405.doc

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