BIO Applauds House Passage of Research & Development Tax Credit Extension

WASHINGTON, D.C. (December 8, 2006) – Biotechnology Industry Organization (BIO) President & CEO Jim Greenwood today issued the following statement regarding passage by the House of the Tax Relief and Health Care Act of 2006 (H.R. 6111):

“The Tax Relief and Health Care Act passed today by the House renews and strengthens a critical and effective federal incentive that is both vital to maintaining U.S. competitiveness and one of the primary reasons that the United States currently leads the world in bioscience research and development. We urge the Senate to also pass this important legislation.

“If passed by the Senate, the act will extend the R&D tax credit through the end of 2007 and strengthen it by creating a new Alternative Simplified Credit as an option for companies in 2007. Additionally, the extension of the credit is made retroactive for research expenses incurred beginning on January 1, 2006, thus providing for a seamless extension. The provision is estimated to save taxpayers $16.3 billion over the next five years

“Because the credit expired at the end of 2005, failure to extend and strengthen the R&D credit before the close of the 109th Congress would have serious negative consequences for American companies. If the R&D credit is not retroactively extended and strengthened by Dec. 31, 2006, companies will be required to state their annual year-end earnings reflecting the full impact of a higher tax rate due to the fact that the credit has lapsed. As such, failure to immediately and retroactively extend the R&D credit prior to adjournment would adversely impact annual earnings-per-share for all companies who would have otherwise claimed the credit. For highly research-intensive bioscience and medical technology companies, particularly those that must raise funds in the capital markets, this could seriously destabilize their position in the marketplace.

“Additionally, since the inception of the R&D credit, numerous states have enacted their own incentives pegged to the amount claimed under the federal credit. State governments increasingly realize that they are no longer competing just within the United States to attract research activity. Governments around the world have created the necessary infrastructure and are now offering U.S. companies highly competitive and valuable long-term, contractual incentives to attract new investments in research and related manufacturing facilities.  The extension of the R&D credit will help biotechnology companies conducting research in the U.S. compete and win  in the global economy.”

BIO represents more than 1,100 biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and 31 other nations. BIO members are involved in the research and development of healthcare, agricultural, industrial and environmental biotechnology products.