Lost in the ongoing drama over Connecticut’s ailing economy—new data this week again showed declining tax revenue despite repeated tax increases—was some positive news.
The General Assembly’s Finance, Revenue, and Bonding Committee endorsed four bills championed by CBIA's Connecticut Bioscience Growth Council that will strengthen the state's life sciences sector, and create jobs and tax revenue.
HB 6746 provides individual investors a $50,000 credit, and venture capital firms a $250,000 credit, against Connecticut’s income tax.
The credit applies to Connecticut biotech companies engaged in life sciences research or the manufacture of medicines, medical equipment, medical devices, and laboratory/diagnostic instruments or software. Taxpayers may sell the credits created by the legislation.
Given the great sums needed to bring biotech innovations from concept to approved product, this legislation will be a powerful economic driver for new biotech companies and the formation of venture capital firms in Connecticut.
SB 965 aims to accomplish what HB 6746 does, but on a much broader scale.
The original bill would have applied to venture capital investments of any type—not only biotech—with no limits on the amount of credit.
With few Connecticut firms qualifying as venture capital investors, the legislation would have helped draw firms to Connecticut without impacting existing tax revenue streams.
But there was anxiety over creating a new, open-ended tax credit, and legislators amended the bill to charge Connecticut Innovations with the task of studying the economic impact of exempting venture capital income.
Putting the incentive in place now would have been the best outcome for Connecticut, but a study leading to more effective incentives for venture capital investment is a good start.
Stranded Tax Credits
SB 1055 allows companies to use tax credits they have earned but are unable to use because of certain limits imposed by the General Assembly.
While the bill's language changed somewhat, the concept of allowing a mechanism for companies to use these stranded tax credits was placed in the larger state biennial budget bill.
The legislation provides for the Department of Economic and Community Development to create a program for using stranded tax credits when companies invest in capital projects and/or create new jobs.
CBIA will be working to ensure this provision survives in the final budget adopted by the General Assembly.
Finally, the Finance Committee sent SB 1056, which charges a task force with formulating a strategy to build a microbiome sector in Connecticut, to the General Assembly for passage.
The microbiome—the genetic data of all the organisms living in and on us—and its promise for understanding and curing disease is on the leading edge of life sciences research.
The microbiome field is attracting top scientific talent and a great deal of research funding.
Making Connecticut a center for microbiome research and development will serve us well, helping build our biopharma industry and job opportunities for Connecticut residents.