HONOLULU, Hawaii (Legal Newsline) - Hawaii Gov. Linda Lingle this week vetoed legislation that would have taxed retailers that have affiliate relationships with online companies such as Amazon and Overstock.

The Republican governor's veto follows an opinion by state Attorney General Mark Bennett that House Bill 1405 might not stand up to legal challenge because it embraces more than one subject, in violation of the state constitution.

In a statement, the governor said she vetoed the bill because the proposal would have a negative affect on the state's economy by placing Hawaii companies at a competitive disadvantage.

Companies' affiliate programs allow other businesses to earn money by posting the Internet retailers' ads on their Web sites.

Already, Seattle-based Amazon.com, the nation's largest online retailer, and Salt Lake City-based Overstock.com have severed ties with their sales affiliates in Hawaii because of uncertainty surrounding HB 1405.

"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 businesses throughout our state," Lingle said. "I am hopeful by vetoing this bill that mainland-based companies will promptly restore their relationships with our state."

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.