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Amazon doesn't wait for Lingle to save golden goose


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POSTED: Wednesday, July 01, 2009

A faucet that gushed millions of dollars into Hawaii's economy has been shut off as Amazon.com terminated its Hawaii affiliate program yesterday because of uncertainty over House Bill 1405, which is awaiting the governor's action.

The program allowed Hawaii residents with Web sites to earn commissions on referrals to Amazon.com and sister-site Endless.com that resulted in purchases.

Late yesterday, Gov. Linda Lingle notified the Legislature the bill was among 65 she may veto. It places Hawaii companies at a disadvantage to mainland and international firms by attempting to tax out-of-state businesses and is legally defective in that it violates the state constitution, she said.

The way the bill was worded, mainland travel agents booking Hawaii trips for clients would have been “;pulled in”; to the tax, said Lowell Kalapa, executive director of the Tax Foundation of Hawaii.

It would also burden Hawaii online retailers with accurately collecting taxes from clients in far-flung and taxation-divergent communities across the country, he said.

Amazon.com, the nation's largest online retailer, notified Hawaii affiliates Monday night it would discontinue their commission payments effective yesterday.

“;We were forced to take this unfortunate action in anticipation of actual enactment because of the uncertainty and timing of a veto, and the possibility that a veto could be overridden. The governor has until July 15 to veto the bill but, as indicated, the bill has an effective date of July 1,”; the e-mail said.

“;In the event that Hawaii's governor vetoes this tax collection scheme, and that veto is not overridden, or in the event the law eventually is repealed, we would certainly be happy to re-open our associates program to Hawaii residents,”; the company e-mail said.

The links and buttons may still be live on affiliates' sites, but click-throughs will not generate commissions.

“;We are not systematically removing links from Web sites,”; Smith said.

However, she added, “;We are no longer paying associates referral fees for any purchases made on or after (yesterday).”;

She said yesterday that she was uncertain how quickly the affiliate program could be restarted.

Commissions vary widely, but the sum would add up to “;millions of dollars of losses,”; said Dean Takamine, a Honolulu affiliate marketing consultant.

Enactment of the law would cause a big shift in where the money goes online, he said.

One local Web site designer, who asked not to be identified, said three sites he is about to launch were to rely heavily on affiliate marketing and would lose $1,000 to $1,500 a month if the law takes effect.