This op-ed was first published in the Argentinian newspaper La Nación (in Spanish).
Tax incentives and investment promotion schemes are part of the standard toolkit of economic policies virtually everywhere in the world.
When well designed, these instruments can generate significant benefits: boosting job creation, encouraging the adoption of new technologies and increasing exports.
But they can also become very costly and high-risk policies. Every tax exemption or reduction represents revenue that the state fails to collect and which could otherwise be used to fund public policies. Furthermore, these schemes often include guarantees of regulatory and fiscal stability that limit the state’s ability to amend its legislation for decades, as well as clauses providing access to international arbitration proceedings that can lead to multi-million disputes in foreign jurisdictions.
Another key risk is redundancy. An incentive is redundant when it subsidizes investments that would have been made anyway in the absence of the tax benefit. In such cases, the State simply transfers public resources to projects where the investment decision remained unchanged. The investment takes place, but not because of the incentive. Evidence shows that governments tend to overestimate the impact of tax incentives, as these play a secondary role amongst the factors that firms consider when making investment decisions.
The relevant question, then, is whether the economic benefits justify the cost and the risks involved.
International best practice recommends carrying out ex ante assessments before approving incentive schemes. These assessments seek to answer relatively simple, albeit technically complex, questions: What will be the expected fiscal cost? How much additional investment is expected to be generated? Who will be the beneficiaries? Which sectors will be affected? What direct and indirect effects will it have on employment, innovation, the development of local suppliers, exports or the environment? What is the expected balance between costs and benefits?
Such assessments do not eliminate uncertainty – no model can perfectly predict investor behavior, but they ensure that public decisions are based on evidence rather than solely on expectations.
This is precisely why the process followed by the Argentinian government with the RIGI (Régimen de Incentivos para Grandes Inversiones) and, more recently, with the so-called “Super RIGI” is so striking. Despite these being two of the most ambitious tax incentive schemes of recent decades, the Government did not publish an assessment estimating their economic impact or their fiscal cost. Nor did it provide alternative scenarios or sensitivity analyses regarding investment, employment or tax revenue to inform the debate. Even more worrying is that Congress approved the RIGI and gave preliminary approval to the ‘Super RIGI’ without an official report analyzing these aspects in detail.
The official position taken to justify the lack of estimates regarding the fiscal cost was to argue that fiscal balance – one of the main priorities of Milei’s administration – is not compromised because the investments benefiting from the scheme would not exist without the RIGI.
The first problem with this argument is conceptual. The RIGI’s supposed effectiveness is being confused with the obligation to estimate and report its fiscal cost. Even if the RIGI was fully effective, this would not exempt the State from quantifying the revenue forgone. Furthermore, this assertion assumes that there is no risk of redundancy. In other words, that no investment would have taken place without the regime. However, as this is an empirical assumption whose validity is far from evident, this hypothesis should be evaluated, not taken as fact.
In general, the lack of revenue forgone estimates of any tax incentive cannot and must not, under any circumstances, be justified on the basis of good intentions or expectations lacking empirical support.
The only available study providing an estimate of the expected fiscal cost of the RIGI illustrates this uncertainty. The Centro de Economía Política Argentina (CEPA) estimates that the projects included in the RIGI would result in a loss of tax revenue of between 1,307 and 2,362 million dollars annually, assuming that all projects reach full production between 2030 and 2033, and depending on export levels and commodity prices – two key variables given the incentives included in the scheme. This estimate is based on 12 approved projects and a total investment of 26,680 million dollars. However, according to the official RIGI website published by the Ministry of Economy, there are currently 17 approved projects and a further 24 under evaluation, with significantly higher committed investments. It is reasonable to expect, therefore, that the annual fiscal cost will be considerably higher. Furthermore, the study was published in May 2026, almost two years after the approval of the RIGI, and so could not serve as input for the legislative debate.
Investment promotion policies are legitimate and, in many cases, necessary tools. But precisely because they commit significant public resources, they must be subject to rigorous evaluation standards. A good policy is not defined solely by its stated – or desired – objectives, but also by the quality of the evidence underpinning it. When that evidence is lacking, even the best objectives run the risk of becoming costly gambles.
The RIGI was approved without proper scrutiny. Parliament still has time to avoid taking another leap of faith with the ‘Super RIGI’, and suspend its parliamentary process until the Government publishes a robust and transparent ex ante analysis of its expected costs and benefits. Without such an analysis, Argentina will continue to rely solely on good intentions.