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by Pearl Hahn

Starving for funds, Hawaii’s lawmakers sought to tax anything they considered taxable, from cigarettes to the Internet. The Wall Street Journal took note that Amazon was cutting ties to its affiliates in our state. Amazon’s spokeswoman, Patty Smith, said the company believes such legislation is unconstitutional.

Earlier this month, Governor Lingle, like California Governor Schwarzenegger, vetoed a bill that would have required online retailers, namely Amazon.com and Overstock.com, to collect and pay a sales tax in Hawaii. (Governor Schwarzenegger recently declared a state of emergency due to California’s fiscal troubles. California posts a $24.3 billion deficit).

She said, “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 non-profits such as the University of Hawaii bookstore, and business throughout our State.”

Surprisingly, State House Majority Leader, Blake Oshiro, claimed House lawmakers would not try to override the veto.

Thus far, Amazon.com has dropped affiliates in Hawaii (although they have said they would reconsider in the case of a veto), North Carolina, and Rhode Island.

Online retailers like Amazon.com use marketing associates to drive traffic to its website. The number of such associates is likely in the thousands.