Hawaii Internet Sales Tax Bill Passes Legislature; MN Governor Says No to Internet Sales Tax Legislation

In Hawaii, H.B.1405 -- which was introduced in the Hawaii House of Representatives by Rep. Isaac W. Choy (D-24) -- would require out-of-state online retailers with affiliates in the state to collect and remit sales tax. Recently, the bill passed both Hawaii's House and Senate, as reported by the Honolulu Advertiser.

"We are pleased that Hawaii's legislature passed the Internet sales tax bill," said Oren Teicher, ABA COO. "As yet another state moves closer to passing e-fairness legislation, this is a tremendous victory for independent retailers everywhere. We strongly urge Governor Lingle to sign this important bill, which will help the state's long-term economic health by putting a halt to the sales tax avoidance practices of out-of-state online retailers with affiliates in the state."

Choy's legislation applies to those out-of-state retailers whose gross receipts from affiliate sales to customers in Hawaii exceed $10,000 during the preceding four quarterly periods. Governor Linda Lingle has until June 30 to provide a notification of objection to the bill and until July 15 to sign the bill, according to Choy's office. At present, it is unclear whether the governor will veto Choy's bill.

In Minnesota, the sales tax story included a good deal of last-minute politicking. In the early hours of Tuesday, May 19, Minnesota Governor Tim Pawlenty announced that he would veto an omnibus tax bill, after what media reports described as a very contentious legislative session late Monday. The omnibus tax bill had contained an Internet sales tax provision that would have required out-of-state online retailers with nexus in the state to collect and remit sales tax. However, at some point on Monday, the provision had been removed from the bill, presumably as legislators scrambled to create a tax bill that they thought the governor would not veto. The governor had already vetoed an earlier version of the tax bill over the weekend, according to Forbes.

"We are disheartened to learn of Governor's Pawlenty's opposition to the Internet sales tax legislation," Teicher said. "However, our e-fairness campaign in Minnesota is far from over. Our cause has widespread support among Minnesota's businesses and from the state legislature, and the governor's unfortunate response will in no way lessen our commitment to working with the Midwest Booksellers Association and indie booksellers and retailers throughout the state on behalf of e-fairness. Our efforts will continue in Minnesota, and we remain optimistic that we will be successful."

Pawlenty said he plans to balance the budget through unilateral cuts, or unallotments, according to press reports. "[Democratic legislators'] plans to increase income taxes, sales taxes, remove the property tax cap, create a new Internet download tax, eliminate deductions for mortgage interest, charitable giving, and even organ donation were deeply misguided," Pawlenty said in a statement, as reported by the Home Town Source.

Watch future issues of Bookselling This Week for important updates on the campaigns for e-fairness in both Hawaii and Minnesota.