Business concern over tax credit changes

September 26

Business concern over tax credit changes

While there's much to commend in National's research, science & technology policy, including more funding for basic research, business will hold some concern about plans to cut back the recently introduced R&D tax credit, says Business NZ.

Yesterday, National announced it would reduce the R&D tax credit, introduced in April, from 15 per cent to 10 per cent - saving an average of $105 million annually over three years. It said the money would be redirected to fund science and research at universities and Crown Research Institutes.

But Mr O'Reilly says although there's a lot to praise in the funding of science and research, the increased funding should not come at the expense of trying to encourage businesses to invest in research and development.

"The jury's still out on whether the R&D tax credit will be the silver bullet, but it's hardly helpful for National, as its first move in this space, to be reducing it and in doing so, send a signal that business-led R&D appears to be less valuable under a National Government than under Labour."

"We haven't yet had the chance to see if 15 per cent is the optimal level at which to encourage R&D. Business NZ recommends a thorough review of R&D by any incoming government with a view to increase innovation investment and better linking of research institutions and businesses."

Given the profound importance of R&D generally to New Zealand's success, Mr O'Reilly says it would be important for any incoming government to be focussing strongly on maximising the value of any investment in this space.

ENDS

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