Gao City Saimai launches the Japanese version DOGE! 30-person special attack team implements special tax system black box.

The Japanese government launched the “Japanese version of the DOGE Government Efficiency Department” review mechanism on November 25, aiming to comprehensively examine special tax policies and government subsidies, strengthen fiscal discipline, and reduce waste. Japanese Prime Minister Sanae Takaichi clearly instructed Finance Minister Kato and relevant cabinet members of the Ministry of Finance to cooperate in promoting reforms, emphasizing the long-term accumulated issues of the special tax system and subsidy structure that need to be re-evaluated. The Cabinet Secretariat will recently establish a new office, with about 30 staff members from different ministries involved in the review.

The Japanese version of DOGE's name comes from Elon Musk's American reform organization

(Source: Youtube Screenshot)

The so-called “DOGE” originated from the “Department of Government Efficiency” established by the U.S. government earlier this year. The department is led by Musk as the chief advisor and is known for its strong reforms, having frozen the operations of the U.S. Agency for International Development and laid off a large number of administrative personnel. Although it claimed to have significantly saved the budget, it also led to negative consequences such as union lawsuits and stagnation of public services, ultimately resulting in Musk's resignation in May.

Japanese media refers to the newly established unit of the Takasaki Saimai government as the “Japanese version of DOGE,” implying its reform intensity and political risks. This naming choice itself carries symbolic significance, indicating that the Japanese government hopes to draw lessons from America's radical reform model, but at the same time must confront different political cultures and institutional environments.

The DOGE in the United States, led by Musk, indeed created a shocking effect in the short term, but its long-term sustainability and actual effectiveness remain controversial. While freezing aid agency operations saves budget, it also affects the United States' international image and diplomatic relations. Large-scale layoffs, although reducing personnel costs, have also led to delays and declines in the quality of key public services. Whether Japan can learn from the lessons of the United States and find a balance between efficiency improvement and the quality of public services will be the key to the success or failure of Saito Sanae's reforms.

The design of the Japanese version of DOGE is relatively mild. The scale of 30 cross-ministerial staff is not large, and this structure resembles a review committee rather than a power department. This design may reflect the Japanese government's cautious attitude towards the social backlash that radical reforms might provoke. Unlike Musk's direct approach of freezing institutional operations, the Japanese version emphasizes “review” and “inventory” rather than immediate layoffs.

The special tax system is regarded as the largest 'black box' and has been addressed for the first time

Many experts point out that Japan's special tax system has long been regarded as a “black box.” The tax reductions target agricultural-related practitioners, companies that increase wages, and companies that invest in research and development, among others. Various tax exemption systems are described as “another form of subsidy.” These tax measures are actually unprecedented, as they have not been included in administrative project reviews. For those engaged in agricultural-related activities, they will receive tax reductions or be exempt from full tax payments on land expropriation. For companies that strive to employ a large number of employees, raise wages, engage in research and development, or develop sanitation facilities, they will also receive tax reductions. In reality, this is almost no different from subsidies.

Subsidies are usually subject to audits and inspections, while special tax systems often lack transparency and frequently become sources of “tribal politics” or benefits for specific industry groups. The new government hopes to open the black box for the first time through the Japanese version of DOGE led by Takemasa Hayashi, taking inventory of the special tax reductions that have been repeatedly extended in the past. Some of these projects have been implemented for decades, and the original policy goals have long been achieved or outdated, but due to lobbying and political pressure from the benefiting groups, they have not been able to be canceled.

Core Issues of Special Tax Systems

Lack of Transparency: The scale of tax reduction and the beneficiaries are not subject to regular audit supervision, becoming a fiscal black hole.

Interest Solidification: Specific industries and enterprises enjoy privileges for a long time, forming a vested interest structure that is difficult to shake.

Effectiveness is hard to assess: Unlike subsidies, the actual economic effects of tax reductions lack a quantifiable assessment mechanism.

Political resistance is immense: There is strong support within the Liberal Democratic Party for the special tax system, and the reform is bound to face strong backlash.

However, some commentators warn that there is strong support within the Liberal Democratic Party for the special tax system, and reforms are bound to face significant resistance. Some experts believe that if the tax gap caused by the elimination of the temporary gasoline tax is to be filled, the cancellation of certain special tax reductions does make sense, but it is politically very challenging.

Subsidy Reduction Targets Questioned: Trillion-Level Commitments May Become Empty Talk

During the discussion, there were also doubts about the setting of reform goals. Some individuals pointed out that if the government sets a target of “cutting several trillion yen” without fully reviewing the projects, it may repeat the past mistake of “cutting hard to achieve numbers,” ultimately sacrificing necessary investments. Opinions vary among the Japanese public, political circles, and academia on whether Japan can promote efficiency reforms similar to those in the United States.

Some commentators believe that Japan's administrative system has gradually examined waste through systems such as administrative review and administrative business review over the years, and the actual space for “cutting trillions of yen from the budget” is quite limited. Some comments point out that Japan has attempted to reorganize expenditures from the Liberal Democratic Party and Komeito to the Democratic Party's administration in the past, but usually only stays at the level of “cutting a few items and maintaining the status quo,” making it difficult to touch on structural reforms. Some interviewees candidly stated: “Establishing efficiency departments often becomes a formality, ultimately just a new bureaucratic organization.”

Some participants with experience in administrative review recalled the “political review” of live television during the Democratic Party era, believing that it focused on “political theater based on waste as a theme,” making it difficult for society to truly understand the function and necessity of policies. Several experts emphasized that some expenditures cannot be simply measured by cost-effectiveness, such as investments in technology research and development, supercomputers, etc. Focusing only on short-term reductions could harm the country's future competitiveness.

Former Growth Chairman Aoyanagi from the Restoration Party, as well as experts involved in administrative reform, have pointed out that Japan's current administrative processes have accumulated too many vested interests, making it difficult to promote genuine reductions without clear political will.

Digital Dilemma and Local Autonomy Restrictions

The discussion has also extended to digital reform. Some experts criticize that over 1,700 local governments in Japan still establish their own information systems, resulting in significant waste. Although the Chief Digital Officer proposed a reference model, there is a lack of enforcement power, and the central government cannot require local governments to unify their systems. Some scholars believe that Japan's local autonomy system itself restricts the central government's ability to promote comprehensive reform; as long as the legal system remains unchanged, even if an Efficiency Department is established, it will be difficult to exert substantial influence on the waste in local administration.

This issue is particularly prominent in the digital age. Over 1,700 local governments develop and maintain their own information systems, resulting in serious problems of redundant investment, system incompatibility, and data silos. If it could be unified to a few standardized platforms, it could theoretically save hundreds of billions of yen in expenses. However, the legal framework of local autonomy prevents the central government from imposing unified standards and can only guide through subsidies and demonstrations.

Core Challenges of Reform: Political Will and Social Consensus

Multiple interviewees concluded that the issue is not whether to establish a new organization, but whether the political leadership is willing to bear the political costs of cutting subsidies and confronting interest groups. Some pointed out, “It is almost impossible to find a budget reduction plan that everyone agrees on.” Others believe that genuine reform requires a strong political will, as demonstrated by the Osaka Restoration.

Finance Minister Katayama stated at a press conference that he would widely seek public opinion through social platforms such as X, emphasizing that reform needs social support. This strategy of transparency and public participation is similar to the community mobilization methods employed by Musk in the United States, but whether it can be effective in Japan's political culture remains to be seen. Japanese society tends to be more conservative regarding government reform, fearing that radical changes may undermine the existing social safety net.

Despite the numerous controversies, the launch of the Japanese version of DOGE led by Seiko Noda is still seen as a symbol of the new government's determination for reform. Whether it can achieve substantial results in special tax systems, subsidies, and administrative efficiency in the future will be a key indicator to assess the government's reform capabilities. Japanese media are actively discussing this issue, and the Liberal Democratic Party led by Seiko Noda will face a severe test.