Peru's tax incentives exceed $100B in five years, raising fiscal sustainability concerns

Problem-focused framing that emphasizes fiscal burden and inequality impacts of tax incentives. Uses comparative references (e.g., Pensión 65 budget) to amplify perceived costs. Structures narrative around 'adverse effects' section highlighting regressivity.

Weakening of Peru's fiscal authority as Congress grants indefinite tax incentives without oversight, shifting resources from social programs (Pensión 65) to wealthy sectors. Private sector gains disproportionate influence over tax policy, while state capacity to fund public services diminishes.

Similar to Argentina's tax expenditure spiral in the 2000s, where uncontrolled fiscal incentives contributed to macroeconomic instability and reduced government capacity to address social needs, eventually requiring IMF intervention.

Regressive tax incentives reduce government revenue available for public services (e.g., Pensión 65 social programs). Small consumers and lower-income households benefit minimally from these incentives while bearing the fiscal burden through reduced public spending or higher future taxes. Large tourism and restaurant businesses capture disproportionate benefits (76% concentrated in top 20% of firms).

Peru's government faces pressure to implement tax expenditure reviews and sunset clauses for indefinite incentives. Congress should require technical justification for new tax benefits and consider fiscal consolidation measures to meet deficit targets. Potential reforms include eliminating regressive incentives, implementing time-limited benefits with mandatory evaluations, and redirecting savings to social programs.