DEPARTMENT OF TAXATION STATE OF HAWAII

November 25, 2014

Thank you for the opportunity to present you with the attached Annual Report summarizing the operations of the Department of Taxation (DOTAX) for the fiscal year (FY) ending June 30, 2014. DOTAX collected $6.24 billion in taxes in FY 2014, or 95% of the $6.58 billion that was collected from all taxes administered by the State. Last year, DOTAX collected $6.23 billion in taxes, or 95% of the State's total tax collections of $6.54 billion. The General Excise Tax (GET) is Hawaii's largest source of revenue and accounted for 44% of the State's total tax collections in FY 2014. Revenue from the GET declined to $2.88 billion in FY 2014 from $2.94 billion in FY2013, a drop of 2%. Revenue from Hawaii's Individual Income Tax (IIT), Hawaii's second largest tax, was $1.75 billion in FY 2014, up slightly from $1.74 billion in FY 2013. The IIT accounted for 27% of the State's total tax collections in FY 2014. DOTAX has continued efforts to improve our manual processes and to determine the business requirements for our Tax Systems Modernization (TSM) project. TSM will come with a completely new computer system to replace our outdated system.

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