Hawaii Governor Axes Online Sales Tax Bill

California bill may meet a similar fate.

by Auctiva.com staff writer
- Jul 17, 2009

Hawaii Gov. Linda Lingle has vetoed a bill that would require online sellers to collect sales tax from residents following Amazon's move to cut ties with marketing affiliates in the state.

"I am vetoing this bill immediately to help ensure Hawaii is not economically hurt by legislation that was not well thought out, and would have negative consequences for nonprofits such as the University of Hawaii bookstore and businesses throughout our state," she tells reporters. "I am hopeful by vetoing this bill that mainland-based companies will promptly restore their relationships with our state."

Legislators have been pursuing online sales-tax legislation as a way to bring in some needed revenue and decrease their growing deficits.

Online companies like Amazon, eBay and Overstock have opposed this type of legislation. According to reports, Amazon deems the bill unconstitutional since the company does not have a physical location in Hawaii. According to current law, online companies only have to collect sales tax if the buyer and seller are located in the same state.

In late June, Amazon dropped its marketing affiliates in Hawaii so it wouldn't have to collect taxes if the legislation passed. It also considered cutting ties with North Carolina and Rhode Island and is considering ending relationships in California. Overstock has already stopped working with affiliates in those states.

Amazon says it will return to Hawaii if the veto remains in place, according to officials.

Meanwhile, California Gov. Arnold Schwarzenegger says he will veto similar legislation if it makes it to his desk. Assembly Bill 178 was recently shelved, and is not expected to be reintroduced until at least January.

Patrick Byrne, chairman and CEO of Overstock, says this stance is "business-friendly, consumer-friendly and citizen-friendly… We much hope that legislators of other states now toying with the enactment of similar anti-consumer legislation will follow the California lead."

About the Author

Auctiva staff writers constantly monitor trends and best practices of those selling on eBay and elsewhere online. They attend relevant training seminars and trade shows and regularly discuss the market with PowerSellers and other market experts.

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