The Japanese government held a ministerial meeting to promote the efforts of the Department of Domestic Government Efficiency (DOGE). The purpose is to reform special tax measures and subsidies.
Finance Minister Katayama emphasized the urgent need for objective indicators to review tax expenditures, especially as Japan is expected to face an annual revenue shortfall of 1.5 trillion yen due to the possible abolition of provisional taxes.
Government establishes specialized reform office
The ministerial meeting was attended by Finance Minister Katayama, Chief Cabinet Secretary Kihara, Minister of Internal Affairs and Communications Hayashi, and Minister of Administrative Reform Matsumoto. According to local media reports, the meeting focused on reviewing decades of special tax measures and subsidies.
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In November 2025, the Cabinet Secretariat established the Special Tax Measures and Subsidies Review Office, which is made up of about 30 employees. The department will assess tax incentives, many of which are designed to improve a company’s competitiveness, but are currently under scrutiny due to their effectiveness and lack of accurate tracking.
At the meeting, Finance Minister Katayama emphasized the need for public participation. According to reports, the prime minister recognized the high expectations of the public and announced plans to gather public opinion on the subsidies being considered by the end of the year.
Inspired by US models
Japan’s DOGE effort leverages the U.S. Government Office of Efficiency, which was led by entrepreneur Elon Musk under the Trump administration. In the United States, Mr. Musk’s approach to bureaucratic reform has attracted so much attention that he has even used a chainsaw to symbolize “cutting out” inefficiencies. However, the DOGE experiment ended after Musk left in May 2025, and despite some budget cuts, it missed its $1 trillion reduction goal.
Japanese officials are calling for a more careful process. This plan is not a theatrical move, but rather a thorough and substantive reform. Tensions between reform promises and fiscal realities are growing as the government has to balance its need for fiscal resources with the recently approved large supplementary budget.
The new DOGE targets tax and spending inefficiencies through audits. Particular focus is on corporate tax cuts, but the actual impact is unclear. Amid inflation and budget problems, policymakers want to pinpoint which incentives promote growth and which are outdated relics.
Addressing revenue challenges
If temporary taxes, including the gasoline tax, are abolished, approximately 1.5 trillion yen in annual revenue could flow out. This makes it important to closely examine tax expenditures and subsidies to find alternative funding. The government will analyze which programs should be cut, restructured or replaced to achieve greater impact.
The initiative’s major reforms are expected to begin in fiscal year 2027. This timeline allows us to carefully evaluate hundreds of tax measures and subsidies, each with unique industry and stakeholder relationships. Officials will use objective metrics, moving away from the subjective judgments that have perpetuated the inefficient program.
Finance Minister Katayama said, “We are keenly aware that the people have high expectations.We are preparing to launch a system within the year to solicit opinions from the people regarding subsidies and funds that need to be reviewed.”
Japan’s approach is distinct in that it encourages public input rather than a top-down approach. The government aims to improve transparency by seeking public input on which subsidies should be reviewed. This effort can help build understanding and support for difficult decisions.
