The Japanese government on Friday requested that ministries and agencies conduct a self-examination of special tax-relaxing measures and subsidies based on opinions solicited from the public, as it seeks to cut inefficient spending and increase investments in strategic areas.
“We ask ministries and agencies to undertake reviews of measures and subsidies with low effectiveness, including assessing thoroughly to eliminate what is wasteful,” Finance Minister Satsuki Katayama told a ministerial meeting at the prime minister’s office.
The Finance Ministry said the outcomes of the reviews should be disclosed by around late June and reflected in the ministries’ requests and proposals for the initial budget and tax reforms for the fiscal year starting April 2027.
The ministry solicited public feedback regarding special measures on taxation and subsidies from Jan 5 to Feb 26 and collected 37,174 opinions.
Among them were calls to review financial aid for international students, claiming those coming to Japan on their own initiative should not be given such support. Assistance to private universities was also targeted on the grounds that such aid is impeding the need for reorganization, the ministry said.
Requests over taxation privileges included concern that tax deduction on housing loans appears to disproportionately benefit high-income earners. Questions were also raised about tax benefits for entities carrying out innovative research and development, saying their effectiveness is unclear.
Katayama, who doubles as the minister in charge of special measures on taxation and subsidy review, heads a new entity established last November to implement the review. The initiative is part of Prime Minister Sanae Takaichi’s pursuit of “responsible and proactive” fiscal policies.
A proponent of expansionary fiscal outlays, Takaichi aims to pursue economic growth through investment in key industrial areas, such as shipbuilding and artificial intelligence, but the approach has stirred concerns about Japan’s deteriorating fiscal health.
The establishment of the entity was demanded by the Japan Innovation Party, the reform-minded junior coalition partner of the ruling Liberal Democratic Party. In October, the two parties agreed to create such a body as a condition for forming their alliance.
© KYODO
