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GBC urges maintaining biotech tax credit, increasing it ASAP Letter to Senate President Mike Miller February 5, 2009 On July 1, 2008 fourteen investors in our state’s growing bioscience industry literally lined up at dawn to be among the first to apply for Maryland’s heralded biotechnology tax credit. Since its inception in 2006, this capital formation vehicle has leveraged more than $24 million in private investment in the state’s bioscience industry.
This tax credit addresses one of the most critical needs for our state’s bioscience industry, the need for investment in early stage companies. As young companies face declining federal research dollars and ever cautious investors, they desperately need an infusion of capital. These companies need the ability to attract private sector investors and the Maryland Biotechnology Tax Credit provides just the right incentive to draw investors to these young companies – companies that one day might develop the next blockbuster drug or life saving medical device. The Biotechnology Tax Credit Program provides income tax credits for individuals, corporations and qualified Maryland venture capital firms that invest in qualified Maryland biotechnology companies. The value of the credit is equal to 50 percent of an eligible investment made in a qualified Maryland biotechnology during the taxable year. In the first two years of the program, within months of accepting applications the state exhausted the tax credit pool. Our state’s tax credit has been recognized since its inception as an innovative and solid program with measurable highly positive results. Today the tax credit is funded at the level of $6 million. If additional funds were available, the amount of private investment that would follow would make a significant contribution to the number of biotechnology that are able to get a strong foothold in Maryland. The Greater Baltimore Committee, alongside of our state’s bioscience companies, recognize the budgetary challenges facing the Maryland General Assembly. Accordingly, the GBC is actively advocating to maintain the Biotechnology Tax Credit at its current funding level and urging that the fund be increased as soon as economically practicable. This approach will be critical to the health of this exciting growth industry and important to our strategic plans to make the State of Maryland a hub of bioscience activity. We are seeking your help and support in this effort. As part of Governor O’Malley’s BIO 2020 proposal, he advanced the goal of doubling this tax credit to $12 million in 2010 and again to $24 million in 2013. Although prospects for this increase seem dim for this legislative session, the GBC will push to ensure that the doubling, and doubling again of this essential credit takes place as close to the original projections as possible. We can not, as a state, afford to delay its implementation. Other states are equally as ambitious in terms of their desire to grow a thriving bioscience industry and to surpass Maryland as one of the industry leaders. For example:
Maryland must keep moving forward at a quick pace. Eventually there will be only seven or eight states with large thriving bioscience industry sectors even though forty states are currently striving to build such sectors. Maryland’s chance to be the best and largest of the handful of states with a strong bioscience industry is dependent on our willingness to make a lasting, significant and bold commitment to attracting investment dollars. Sincerely, Donald C. Fry |
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