Weird breaker panel splice 200amp service to 125amp?

Located in the PNW.

So something weird is going on with the panel on my house. I pulled the permit records and they had a permit for 200A service installed to the house

but it appears to be spliced into a 125amp panel and the wire guage is reduced with electrical tape covering the splice.

Is this a safe install or is that a warning sign? Also could I rectify the situation by having the panel replaced with a 200amp panel or just have the breaker replaced with a 200amp breaker? Thanks!