A bill allowing companies to use earned tax credits that are stranded helps the state's biotech and biopharma industries and Connecticut's economy.
Paul Pescatello, senior counsel and executive director of CBIA's Connecticut Bioscience Growth Council spoke in favor of SB 1055 April 25 before the General Assembly's Finance, Revenue, and Bonding Committee.
Companies are limited in the amount of credits they can use each year, resulting in hundreds of millions of dollars in stranded tax credits.
SB 1055 allows companies to use these credits for capital projects that expand their business, increase employment, or generate a substantial return for the state's economy.
The bill requires any such expenditure to be approved by the commissioner of Economic and Community Development with help from the commissioner of Revenue Services.
SB 1055 lets Connecticut continue on its path of investing in life sciences as a foundation for the state's economy and a way to create a broad spectrum of well-paying jobs, Pescatello said.
It "helps advance our strategy of nurturing and building the Connecticut life sciences sector," he said.
Fifteen Years, $2.5 Billion
He noted it takes 15 years and $2.5 billion to bring a new medicine from concept to pharmacy shelves, and that only one out of 1,000 research projects become an FDA-approved medicine.
"Nevertheless, the state where all this research occurs obtains the benefit of research investment dollars being circulated throughout its economy."
And since biopharma is all about research and development, Connecticut must continue to recognize the value that comes with that work by allowing the use of stranded tax credits, he said.
SB 1055 lets Connecticut continue on its path of investing in life sciences as a foundation for the state's economy.
"But the effectiveness of this policy is hobbled by limitations on how much a company can offset with the research and development tax credits they have earned."
He noted that for every $1 the state grants in research and development tax credits, $30 is invested in Connecticut.
"SB 1055 goes some distance in correcting this disincentive to conducting research and development in Connecticut."
Access to Capital
Access to investment capital may be the most important driver of biopharma research and development business activity, and biopharmas are always looking for more capital and ways to extend the purchasing power of their investment dollars.
SB 1055 provides that.
"Business leaders think prospectively, not retrospectively," CBIA President and CEO Joe Brennan told the committee.
"These credits will become a highly visible factor in strategic business planning, and will be available to offset the cost of major capital projects going forward.
"For these reasons, CBIA encourages this committee to support this bill."