Hawaii Amazon Tax Back from the Dead

History may repeat itself. Last year, Hawaii bloggers, webmasters, and other online businesspeople rallied to fight a state plan to tax retailers like Amazon.com for business generated by local affiliates. The state was looking for extra cash, but opponents of the tax bill argued that Amazon.com would just drop its Hawaii partners.

And that's exactly what Amazon.com did when the bill passed, dumping Hawaii residents from its Amazon Associates program. Fortunately, then-Governor Linda Lingle vetoed the affiliate tax bill, and sure enough, Amazon.com welcomed Hawaii back into the fold.

Here we go again.

Ever so quietly, House Bill 1183 was making its way through the Capitol. It was introduced by Rep. Isaac Choy (Dist. 24, Manoa, University). It had already passed the House and crossed over to the Senate on March 10. Today, it passed the Economic Development and Technology (EDT) committee, and is now before the Senate Ways and Means committee (WAM). Through some legislative shuffling, the 'Amazon Tax' bill is now SB1355. (See below.)

Once again I got the heads up from Dean Takamine of Synertech Media, who raised the alarm last time on TechHui. And once again, he makes a pretty clear case for fighting HB1183 SB1355.

For one, should the bill pass, we no longer need to wonder if Amazon.com will terminate its relationship with Hawaii website owners. It has before, and it will again. In short, HB1183 SB1355 won't get any additional tax revenues from Amazon.com and similar companies.

Meanwhile, local people will lose this source of income... income that, of course, would have been taxed. Worst of all, the state would actually lose money as well, spending additional resources to implement and regulate this new tax.

"The real beneficiary of this bill are the 'Big Box' retailers like Best Buy, Walmart, etc.," Takamine writes. "They are spending millions of dollars to lobby across the nation and to fool the public that they are 'pro small business.' Since when is Walmart 'pro small business'? Will Hawaii fall into this trap?"

Indeed, when Illinois passed its 'Amazon Tax' law, Wal-Mart cheered, Walgreens cheered, and Sears cheered, along with several other "traditional" retailers.

"I think we should promote Hawaii's online media industry, not try to destroy it," Takamine says. "It is a clean and low impact industry that generates most of it's revenue from out-of-state."

If you agree (or even if you don't), be sure to contact your legislator and submit testimony. Keep an eye on the HB1183 SB1355 hearing notices, and if you can, go down to the Capitol to make sure your voice is heard, and that they see the faces of the people affected by this legislation.

UPDATE: Takamine reports that Sen. Carol Fukunaga gutted HB1183 and replaced it with SB 1355, the "Streamlined Sales/Use Tax" bill. This after Rep. Angus McKelvey gutted SB1355, and put in the entire contents of the original HB1183. "So the bill is still alive – in another form." Now SB1355 is the one to watch.