WASHINGTON -- The prevailing mood on Capitol Hill is in favorof research and experimentation tax credits.

The question, according to a congressional tax expert, is howlong the government can afford to provide the tax break.

In the present budget climate, costs of permanently extendingR&E credits may be prohibitive, warned Michael Thornton, taxcounsel to the House Ways and Means Committee.

Earlier this year, Rep. Ed Jenkins, D-Ga., introduced a bill in theHouse asking for a permanent extension of the R&E tax credits.Sen. John Danforth, R-Mo., has introduced a companion bill inthe Senate.

Extending the R&E tax credit for one year will cost $500million; if it is extended permanently, it will cost $10 billionover the next five years, said Thornton, speaking on Friday tothe Government Roundtable of the Association of BiotechnologyCompanies.

Ways and Means Chairman Rep. Dan Rostenkowski, D-Ill., hasdirected the committee to review R&E tax credit programs toensure that they are an efficient means of supporting drugdevelopment, Thornton said.

Last month, Sen. David Pryor, D-Ark., chairman of the SenateSpecial Committee on Aging, also requested that Health andHuman Services Secretary Dr. Louis Sullivan evaluate theincentive value of tax credits and grants to the pharmaceuticalindustry.

-- Rachel Nowak Washington Bureau Chief

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