BioNJ president likens the credit to the $1 billion federal biotech program of 2010, though said fewer New Jersey companies would qualify, as the incentive targets a smaller field — companies that make chemicals from renewable sources.
While a federal measure to provide tax incentives for companies manufacturing chemical products from renewable sources would only benefit a handful of biotechnology firms in New Jersey, an industry leader said the impact of the tax credit would trickle down to other businesses and create jobs here.
“It sounds like fewer than 10 companies in New Jersey would qualify for the tax credit, with DSM being the big guy — but if DSM generates more of this type of product, they’ll create jobs as a result of that,” said Debbie Hart, president of BioNJ. “And if the companies taking advantage of the credit pass their savings on to the companies they supply their product to, then those companies could hire 10 people, and then those people would go out to local stores and restaurants and indirectly create even more jobs.”
The Qualifying Renewable Chemical Production Tax Credit Act of 2012, which has been introduced in the U.S. Senate and co-introduced in the House of Representatives by U.S. Rep. Bill Pascrell Jr. (D-Paterson), would provide a share of $500 million in tax incentives over five years to biotech firms producing chemicals from renewable materials, like soybeans and algae.
In a statement, Pascrell said the incentives would “help foster the private capital investments that will make the United States a more economically viable alternative for biochemical firms,” since a 2010 report by the international Biotechnology Industry Organization found investment, production and jobs in the chemicals industry have been rapidly moving abroad since the early 2000s.
“American biochemical companies want to make it in America,” Pascrell said in a statement. “I believe these companies can manufacture the next generation of exports that can drive economic growth and job creation, which has got to be our top priority.”
Hart said Pascrell’s effort shows the state continues to lead on growing biotech in the United States and New Jersey, as the bill dovetails the $1 billion Qualified Therapeutic Discovery Project Tax Credit program introduced by U.S. Sen. Robert Menendez (D-Hoboken) and enacted in 2010.
But Hart said Pascrell’s program could have more success launching more biotech firms in the state, since “it takes 10 to 15 years to bring a therapeutic to market, but it only takes one to two years for one of these chemical products to get there.”
“This industrial biotech sector does not have to face the regulatory hurdles that the therapeutics sector does. I think the shorter timeframe will get companies to take advantage of the program,” Hart said. “Some companies here are already producing these types of chemicals, but this gives people in the industry more incentives to start companies for that purpose.”