Japanese Version of DOGE Established

Prime Minister Sanae Takaichi established the office in charge of revising special measures on taxation and subsidies in Cabinet Secretariat. Takaichi expects that the office will detect inefficiency of the national government, inspired by Department of Governmental Efficiency (DOGE) of the United States. However, it is skeptical that the organization, which members are basically bureaucrats, can steadily promote reform of current systems in the executive branch. 

There are some loopholes in taxation system in Japan for political purposes. To support the people obtaining their own house, the national government applies income tax reduction for certain years to support payment for housing loans. To help companies with a plan of technological research and development or efforts for environmental efficiency, the government also reduces tax on those companies. Such benefits are called “special measures on taxation.” This system sometimes has troubles in transparency.

 

The special measures in taxation reduced national revenue by 2.9 trillion yen in FY 2023. Lightening tax for raising workers’ wage, such as reduction of corporate tax for companies that increased salary for their employees or tax reduction for technological research and development, occupy a great share, which amounted 1.7 trillion yen. Although wage hike has been achieved for a certain degree along with price inflation, decline of revenue still continues.

 

The government also has various funds in its ministries. Those funds are accumulated to promote specific policies including innovations for small and mid-size companies, introducing cutting-edge machines for farmers or shipbuilding that would improve maritime transports. The greatest merit of those funds is that it can wrap up spendings for multiple years, fiscal system which enables continuous promotion of specific policies.

 

Takaichi administration is going to review those spendings in FY 2027, but it will partly start in FY 2026. Embracing vulnerability as a minority government in the Upper House, Takaichi administration needs to include policies of the coalition partner or opposition parties, such as gasoline tax cut or support for high school tuition, which will require certain amount of spendings.

 

Takaichi aims at those taxational special measures, governmental funds and other subsidies to squeeze financial resource for the policies to maintain her administration. It is concerned, on the other hand, that policy shift for political purpose may affect business activities which have been dependent on governmental support.

 

The DOGE in the U.S. was mainly targeted spendings with liberal organizations, which included U.S. Agency for International Development (USAID) or Environmental Protection Agency (EPA), driven by ideological causes. Japan version of DOGE is likely to have been established for weakening authority of Ministry of Finance, which has been exercised its power on fiscal policies. It is notable that Takaichi administration is under strong influence of Ministry of Economy, Trade and Industry, as former Shinzo Abe administration had been.

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