Global Tax 50 2014: Joe Hockey

Joe Hockey is a new entry this year

"Let me be very clear: a tax cheat is a thief," said Joe Hockey at a speech in Washington before meetings of G20 finance leaders in October. Australia's Treasurer made his position on tax evasion clear during the country's tenure as president of the G20, emerging as a strong leader against corporate tax evasion. Hockey's comments came after the release of the first Luxembourg Leaks documents in November.

"Wherever companies engage in extraordinary activity in order to avoid tax, we will go after them. We have an obligation to every taxpayer in Australia to ensure that everyone that earns profits in Australia pays tax in Australia," said Hockey.

Australia has been particularly vocal in the crackdown on tax evasion. Though it has sophisticated transfer pricing and taxation laws, laws have a difficult time keeping up with rapidly changing technology and innovation. Hockey has used his position to ensure Australia's continued tax development.

"We remain dissatisfied with the tax outcomes some multinationals are able to manufacture, which creates an uneven playing field for smaller businesses, and it unfairly shifts the tax burden on to others," Hockey said in September.

Despite these sophisticated transfer pricing rules, Australia's tax planners faced multiple challenges in 2014. In October, Australia's Tax Justice Network published a controversial report claiming that Australian corporations were evading tax. Though the report methodology was questioned, the ATO is now investigating the Australian operations of several of the world's largest technology companies, including Apple and Google. Hockey responded by pledging government resources to end tax evasion.

Domestically, Hockey has overseen the repeal of two divisive indirect tax policies – the carbon pricing mechanism, repealed at the third attempt in July, and the minerals resource rent tax (MRRT) aimed at mining activity. Though the indirect taxes had environmental benefits, they were contested hotly by industry lobbyists and caused havoc for former prime minister Julia Gillard.

Most recently, Hockey hinted at the possibility that Australia might follow in the UK's footsteps on a new initiative dubbed the 'Google tax', which will levy a 25% tax on multinationals who evade taxes by shifting income overseas. Tax officials from Australia have reportedly met with their British counterparts to learn more about the proposed tax, which was published as part of the UK's Draft Finance Bill in September.

In a poll conducted by ReachTel of constituents in North Sydney, 72% expressed that they believed the Coalition was not doing enough to stop corporate tax evasion. The popularity of reforms to stop tax evasion will ensure that pressure remains on Hockey to continue his work in the area. Though 2014 marked the completion of only his first year in office, Hockey is poised to continue to shape the focus of Australia's tax reforms, especially considering the promise of a White Paper on Taxation in 2015.