By Lisa Seachrist

Washington Editor

WASHINGTON - A legislative effort to make the research and development (R&D) tax credit permanent has garnered bipartisan support in the U.S. House of Representatives.

Rep. James Sensenbrenner (R-Wis.), chairman of the House Science Committee, has introduced H.R. 760, a bill to make the R&D tax credit a permanent part of the tax code. Rep. George Brown (D-Calif.), ranking member of the committee, has agreed to cosponsor the legislation.

"There appears to be a lot of bipartisan support for this legislation both in the House and in the Senate," a Science Committee spokesperson told BioWorld Today. "Both Congress and the private sector see the value of this legislation."

The R&D tax credit allows companies to write off expenses associated with research and development. The credit is set to expire June 30, 1999. First introduced in the early 1980's, the credit usually has been renewed each time it has expired. However, for 18 months starting in 1995, the credit lapsed.

Companies trying to plan their research spending have been left guessing, as they tried to predict whether Congress would renew the tax credit and for how long. Biotechnology and pharmaceutical companies, which are investing in drug development projects that can take up to 15 years, have particular interests in seeing the R&D tax credit become permanent.

In a statement, Sensenbrenner described the tax credit as a "tried and true" incentive for long-term investment in research. However, because of the uncertainty surrounding its continued renewal, the credit fails to provide as powerful an incentive as it might, a Science Committee spokesperson said.

"The current situation makes research and development planning disjointed," the spokesperson said. "This bill takes the uncertainty out of the situation."

In proposing to make the credit permanent, Sensenbrenner cited a 1998 Coopers and Lybrand study, which found U.S. companies would spend substantially more on R&D under a credit extension. The study claimed that the additional R&D investment would improve productivity almost immediately, adding more than $13 billion a year to the economy by the year 2010.

In addition, the study estimated that tax credit would pay for itself by generating $1.75 in additional tax revenue for each dollar spent by the federal government on the credit.

Jacqueline Cottrell, spokeswoman for the Pharmaceutical Research and Manufacturers of America (PhRMA), said that, while "PhRMA hasn't taken a position on any bill to make the R&D tax credit permanent, we definitely support the idea."

Cottrell said the organization will look at the details of the various bills before supporting any particular measure.

The Biotechnology Industry Organization (BIO) has also come out in support of the concept of the R&D tax credit as a permanent incentive.

The bill will see its first action in the Science Committee, which will review the issue. That committee, however, can't move legislation to the House floor. The measure's likely next stop will be the House Ways and Means Committee.

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