DOGE Japan Edition Launches to Reform Tax Breaks and Subsidies

Japan’s government held a ministerial meeting to advance a domestic Department of Government Efficiency (DOGE) initiative. The goal is to reform special tax measures and subsidies.

Finance Minister Katayama underlined the urgent need for objective metrics to review tax expenditures, especially as Japan faces a projected annual revenue shortfall of 1.5 trillion yen due to potential provisional tax abolitions.

Government Establishes Dedicated Reform Office

The ministerial meeting included Finance Minister Katayama, Chief Cabinet Secretary Kihara, Minister of Internal Affairs and Communications Hayashi, and Minister for Administrative Reform Matsumoto. According to a local media report, the session focused on reviewing decades-old special tax measures and subsidies.

In November 2025, the Cabinet Secretariat established an Office for the Review of Special Tax Measures and Subsidies with about 30 staff members. This unit will evaluate tax incentives, many of which were designed to improve corporate competitiveness but are now under scrutiny for their effectiveness and lack of precise tracking.

At the meeting, Finance Minister Katayama stressed the need for public engagement. Reports noted that he recognized high public expectations and announced a plan to collect citizen feedback on subsidies under review before year-end.

Drawing Inspiration From the US Model

The Japanese DOGE effort draws on the US Department of Government Efficiency, which entrepreneur Elon Musk led under the Trump administration. In the US, Musk’s approach to bureaucratic reform was highly visible, even using a chainsaw as a symbol to “cut” inefficiency. Yet, after Musk left in May 2025, the DOGE experiment ended, missing its $1 trillion reduction goal despite some budget cuts.

Japanese officials seek a more measured process. The plan is for thorough and substantive reform, not theatrical moves. The government must balance the need for fiscal resources with its recent approval of a sizable supplementary budget, increasing tension between reform promises and financial realities.

The new DOGE targets inefficient taxes and spending via audits. There is a specific focus on corporate tax breaks whose actual impact is unclear. Amid inflation and budget issues, policymakers want to pinpoint which incentives promote growth and which are outdated remnants.

Addressing the Revenue Challenge

The potential abolition of provisional taxes, including the gasoline tax, could drain around 1.5 trillion yen from annual revenue. This makes it crucial to seek alternative funding by closely reviewing tax expenditures and subsidies. The government will analyze which programs to cut, restructure, or replace to achieve greater impact.

Major reforms from this initiative are expected to start in fiscal year 2027. This timeline allows for careful evaluation of hundreds of tax measures and subsidies, each with unique industry and stakeholder ties. Officials plan to use objective metrics, moving away from subjective judgments that have let inefficient programs continue.

“We are keenly aware of the high expectations held by the public. We are preparing to launch a mechanism within the year to solicit opinions from the general public on subsidies and funds that should be reviewed,” Finance Minister Katayama stated.

Japan’s method stands out for encouraging public input rather than a top-down approach. By inviting citizen opinions on which subsidies to review, the government seeks greater transparency. This effort could build understanding and support for tough decisions.