State's life sciences tax-incentive plan still on track
Even as the economic downturn has forced Massachusetts Gov. Deval Patrick to pursue nearly $1 billion in state spending cuts, officials are finalizing a series of tax credits intended to help grow more life sciences jobs.
The $250 million in tax credits will be capped at $25 million annually over 10 years as part of the state's billion-dollar incentive package for the industry. Observers say the investment is important even in tough economic times.
"We can afford the tax credits because it is critical that we build this sector," said Mike Widmer, president of the Massachusetts Taxpayers Foundation. "We can't mortgage our future."
In fact, Patrick's proposed cuts will affect a sliver of the state's recently passed $1 billion life sciences package. He recommends taking $5 million out of this year's portion of a life sciences investment fund, which is designed to issue $25 million annually in grants over 10 years. The plan will also support spending on infrastructure and research by both academics and startups.
"That's a challenge," John Heffernan, vice president of policy and external affairs for the Massachusetts Biotechnology Council, said of the proposed reduction. "But we are in a good place and there are still some opportunities for our member companies to take advantage of this."
Companies interested in applying for the tax credits will be able to do so through the quasi-public Massachusetts Life Sciences Center, which will administer the credit applications as well as capital spending awards and grants issued under the program. Applications will likely be handled online through the center's Web site at www.masslifesciences.com, said Angus McQuilken, the center's vice president for communications.
Tax credits will cover areas including investments, U.S. Food and Drug Administration application fees, research, clinical testing for drugs that treat rare diseases, sales tax exemptions for certain equipment or repairs, and an allowance for life sciences companies to carry forward losses on their balance sheets for 15 years rather than the 5 years allowed now.
By the end of this year, companies hoping to apply for the tax credits will be able to obtain an application through the Massachusetts Life Science Center's Web site.
But they will have to wait first for some of the bureaucracy to be completed first.
The center is developing criteria companies must meet to be certified an official "life sciences" company in order to apply. That will be posted for public review by the end of November, with expectations that companies can start applying for the grants by the end of this year. The Massachusetts Department of Revenue, meanwhile, took public comment through Oct. 20 on draft proposals about how it will handle the credits.
Industry leaders, meanwhile, are working overtime to educate their members about the tax credits and other opportunities provided by the law.
The Massachusetts Medical Device Industry Council, or MassMedic, plans to bring members up to date during its Nov. 14 investors conference and will brief companies about obligations once those are finalized.
"I expect a large number of medical device companies will be interested in how they can take advantage of the various incentives," said MassMedic President Thomas Sommer.
The MBC has also been working hard to get the word out to its members, with a program in September, one planned for Halloween in Framingham and a scheduled education seminar Nov. 10 in Springfield.
"We've been working closely with the Massachusetts Life Sciences Center, our member companies and with some of the elected and appointed (state) officials involved with the program," Heffernan said.
McQuilken added he expects the state will sell the tax credits and its other incentives at life sciences conferences and trade shows nationally and around the world in the coming months.
Boston Business Journal
Mark Hollmer can be reached at firstname.lastname@example.org.