Japan Revives Fiscal Discipline With New DOGE Initiative Amid Rising Debt Pressure
Japan is moving to regain public trust in its fiscal path, launching an initiative inspired by the United States’ former Department of Government Efficiency (DOGE) as concerns rise over soaring spending and weakening market confidence.
The government wants to modernise decades-old tax schemes, reduce waste, and reassure investors after approving a ¥21.3 trillion stimulus package and issuing more than ¥10 trillion in fresh debt.
A New Office Takes Shape Inside Government
Tokyo has created the Office for the Review of Special Tax Measures and Subsidies, a 30-person unit housed within the Cabinet Secretariat.
The team will evaluate hundreds of long-standing tax incentives, many introduced to support corporate competitiveness but now criticised for limited transparency and uncertain results.
Finance Minister Satsuki Katayama said the effort aims to redirect money “to areas that truly need them,” adding that “there is high public interest in reducing waste.”
She stressed that fiscal sustainability must remain visible to citizens, saying:
“It is vital that the public can see we are consistently working towards it.”
The office is expected to be fully operational next year, with its findings reflected in the budget for the fiscal year starting April 2027.
How Will Japan Review Tax Breaks And Subsidies?
The first ministerial meeting brought together Finance Minister Katayama, Chief Cabinet Secretary Minoru Kihara, Internal Affairs Minister Yoshimasa Hayashi, Administrative Reform Minister Taro Matsumoto, and senior advisers including Takashi Endo.
Kihara urged ministries to “check and review their spending, verifying the effects from the budget request stage, in order to fulfil accountability to the public.”
The discussions centred on revisiting special tax measures, subsidies and government funds, many of which have survived for decades without modern evaluation tools.
Japan wants to replace subjective judgement with measurable indicators to decide which programmes remain relevant and which have outlived their purpose.
Katayama acknowledged strong public interest and said the government will start gathering citizen suggestions before year-end, potentially through social media platforms such as X.
She said,
“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.”
Why Fiscal Reform Has Become Urgent
Japan faces a projected annual revenue shortfall of about ¥1.5 trillion if provisional taxes, including the gasoline levy, are abolished.
This increases pressure to find alternative funding sources and cut inefficient spending.
Market unease has intensified.
Expectations of large-scale spending by Prime Minister Sanae Takaichi’s administration pushed yields on long-term government bonds to record highs and added pressure on the yen.
While the premier insists on a policy of “proactive but responsible” fiscal management, investors remain cautious as debt issuance climbs.
Learning From The US DOGE Experiment
Japan’s version of DOGE draws partial inspiration from the US model established under President Donald Trump, where Elon Musk briefly led a high-profile push to reduce federal waste.
Musk often used a chainsaw as a playful emblem of aggressive downsizing, and teams of tech specialists were deployed across departments.
But after Musk’s departure in May 2025, the US initiative faded without achieving its US$1 trillion reduction target.
Rather than dramatic symbolism or mass restructuring, Japan is opting for a slower, methodical, administrative process carried out by career officials.
The aim is not to dismantle ministries but to identify weak links in the tax and subsidy ecosystem, especially corporate tax breaks where economic impact is either unclear or poorly documented.
Can The Government Rebuild Trust In Its Spending Plans?
The DOGE-inspired programme became part of a coalition agreement between the Liberal Democratic Party and the Japan Innovation Party in October, helping secure Takaichi’s path to the premiership.
Ministers now want to show a clearer distinction from previous administrations by demonstrating that every yen of public money is justified.
Kihara said measures that “genuinely support people’s lives or help drive growth should be prioritised boldly, while those with little impact should be reconsidered.”
The approach signals a shift toward selective spending rather than broad austerity.
The first major reforms are planned for fiscal year 2027, giving officials time to review hundreds of tax items and subsidies entwined with industry lobbies.
The government hopes that public participation and transparent methodology will soften resistance to any future cuts.
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