Japanese DOGE version of tax credit and subsidy reform launched

The Government of Japan held a ministerial meeting to advance the local initiative of the Department of Government Efficiency (DOGE). The goal is to reform special fiscal measures and subsidies.

Finance Minister Katayama stressed the urgent need for objective metrics to review tax expenditures, especially as Japan faces an expected annual revenue shortfall of 1.5 trillion yen due to the prospect of eliminating temporary taxes.

The government creates an office dedicated to reform

The ministerial meeting includes Finance Minister Katayama, Government Secretary Kihara, Internal Affairs and Communications Minister Hayashi, and Administrative Reform Minister Matsumoto. According to Local media reportThe session was focused on the review of outdated tax measures and subsidies.

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In November 2025, the General Secretariat of the Council of Ministers established an office to examine special fiscal measures and subsidies with about 30 people. This unit will evaluate Tax incentiveswhich was designed to improve the competitiveness of companies, but is now under scrutiny for its effectiveness and lack of accurate tracking.

At the meeting, Finance Minister Katayama emphasized the need for public participation. According to Reportsrecognizes the high expectations of the public and announces a plan to collect the opinions of citizens on the subsidies submitted before the end of the year.

Take inspiration from the American model

Japan’s DOGE effort borrows from the US Department of Government Efficiency, which entrepreneur Elon Musk led under the Trump administration. In the United States, Musk’s approach to bureaucracy reform has been very visible, even with a chainsaw as a symbol of cutting efficiency. However, after Musk left in May 2025, the DOGE experiment ended up just short of the $1 trillion goal despite some budget cuts.

Japanese officials are looking for a more gradual process. According to the floor, Comprehensive and fundamental reforms were carried out, not theatrical movements. The government must balance the need for financial resources with its recent approval large additional budget, That increases the tension between promises of reform and financial reality.

The new DOGE targets ineffective taxation and waste through audits. There is a special focus Corporate tax rates The real impact of which is unknown. Amidst inflation and fiscal woes, policymakers want to determine which stimulus promotes growth and which is outdated.

Addressing the revenue challenge

The prospect of eliminating temporary taxes, including the gasoline tax, could result in a shortfall of about ¥1.5 trillion in annual revenue. This makes it necessary to look for alternative financing by carefully reviewing tax expenditures and subsidies. The government will analyze which programs should be cut, restructured or replaced to achieve a greater impact.

Major reforms to this initiative are expected to begin in the fiscal year 2027. This period allows a careful evaluation of hundreds of fiscal measures and subsidies, each with unique connections to a particular industry and stakeholders. Officials plan to use objective measures, moving away from subjective judgments that have allowed ineffective programs to persist.

Finance Minister Katayama said We are fully aware of the high expectations of the public. We are preparing to launch a mechanism during the year to collect public opinions on subsidies and funds that need revision.

Japan’s approach to encouraging public input rather than a vertical approach stands out. By inviting citizens to express their opinions on which subsidies should be reviewed, the government seeks greater transparency. This effort can help build understanding and support for difficult decisions.