Winding back R&D tax credit would threaten jobs
Medicines Australia chief executive Dr Brendan Shaw today made the following statement in response to the release of the Treasurer’s Business Tax Working Group discussion paper:
“Medicines Australia is extremely concerned that the Business Tax Working Group is considering as an option a change to the R&D tax credit, barely a year after it was introduced.
“Any winding back of the R&D tax credit would discourage investment in Australia and cost high-value research jobs. It would be extremely damaging to R&D investment in Australia and to our reputation as a predictable investment destination.
“On the R&D tax credit the Working Group’s discussion paper gets one thing right when it says ‘the reforms could, depending on transitional arrangements, affect the returns of long-term projects that were modelled on the basis of the pre-existing regime. As a result, some companies may relocate their R&D to countries that offer better incentives.’
“Australia currently attracts more than $1 billion a year in pharmaceutical R&D investment. That investment would diminish if there were any winding back of the tax credit.
“Some companies would simply stop bringing R&D investment dollars to Australia.
“The Government went through an extensive consultative process in developing the tax credit system to replace the previous tax concession. To do a backflip on such an important policy measure after barely a year would send quite the wrong signal to the investment community.
“The tax credit is the only incentive the Government offers companies to invest in Australian R&D and it absolutely must be retained. It is time for the Government to support its own policy and categorically rule out the Working Group’s option to wind back the R&D tax credit.
”At the end of the day, the Government is going to have to decide whether Australia’s future is in encouraging innovative industries or just digging things out of the ground.”
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