Legislative Committee Backs Research And Development Tax Credits

HARTFORD — Legislation intended to boost research and development financing by Connecticut businesses cleared a key committee of the General Assembly Tuesday.

The Finance, Revenue and Bonding Committee unanimously approved a measure that accelerates the schedule for raising the cap on R&D tax credits. The measure would restore the limit to 70 percent of a company’s corporation income tax.

The legislature previously reduced the cap to 50.01 percent but raised it in December 2015 to 70 percent over four years. The bill now being considered proposes to bring it back up to 70 percent over three years.

The cost of the credit to taxpayers, according to the legislation, would be $500,000 in 2017, $2 million the following year and $1.5 million in 2019.

Businesses, particularly bioscience that spends heavily for researching drugs, have been urging the legislature to raise the limit on tax credits. Manufacturers also see the tax credit as critical in boosting their companies that are hard-pressed to expand in response to fierce global competition, a strong dollar that makes U.S. exports costlier and other factors.

Rep. Jeffrey Berger, House chairman of the Finance, Revenue and Bonding Committee, said lawmakers see the bill as helping stimulate Connecticut’s economy and increase tax revenue. “We wanted to ramp that up for existing projects,” he said.

Sen. L. Scott Frantz, the ranking Republican senator on the committee, said Republicans joined Democrats in supporting the bill. But he questioned whether the state could afford the revenue hit in 2017-19 as estimated by the legislature.

Revenue expected to rise in the future has “been the hope as long as I’ve been in this building and that’s been eight years,” Frantz said.
The legislation now heads to the Senate for consideration.