Gov. Lingle Vetoes Online Tax Bill

A quick update to my last post on Amazon.com dropping Hawaii affiliates. As the online giant (and many local affiliate marketers) hoped, Gov. Linda Lingle today vetoed HB1405.  Now the ball is in the Legislature’s court, as lawmakers mull convening a special session to override the governor’s vetoes. The full text of Gov. Lingle’s press release below the fold.

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.