Biotech Tax Breaks Built On Accountability
How do you design a state tax incentive program that ensures transparency, accountability and a solid return on investment? We at the Massachusetts Life Sciences Center think we have the answer.
The Massachusetts Life Sciences Initiative authorizes the center to award up to $25 million in tax incentives each year, a key component of our state’s 10-year, $1 billion committment. In 2009, through a competitive process involving 85 applicants, the center awarded $24.5 million in tax incentives to 26 companies. These companies agreed to create more than 800 new jobs during calendar year 2010, and to sustain them for five years. The incentives went to companies both large and small, in numerous regions of the state.
Applicants are generally companies that have transitioned or are transitioning from pure life sciences research and development to commercialization and manufacturing. The center recognizes that many companies struggle to address the significant capital investment associated with the long life sciences research and development cycle and the high cost of translating research into a commercially viable product. This program is designed to help sustain these companies through a critical stage of development and to leverage additional sources of capital to bring cutting-edge innovation to the marketplace.
Breaks In Action
LightLab Imaging Inc. in Westford is a great example of how this program is making an impact. LightLab received a 2009 tax incentive of $188,951 and, in return, the company committed to creating 29 new jobs during calendar year 2010. The company, which produces technology for vascular and other imaging applications, is seeking to expand its manufacturing capacity at its Westford headquarters. This will allow the company to further expand, creating even more jobs — primarily for skilled assembly workers — in our state’s life sciences supercluster.
To ensure transparency, the development and implementation of the tax incentives program is discussed openly at public meetings of our board of directors. The recipient companies, and the amount of jobs they are committing to create, are also announced through public meetings and broadly to the public via press releases, which are also posted on our website. To ensure accountability, the Life Sciences Initiative contains strong monitoring and clawback provisions. If a company is not meeting their job creation commitments, the center can recommend to the Department of Revenue that the tax incentive be withdrawn. And as for return on investment, the Department of Revenue estimates that our 2009 round of tax incentives will pay for itself in a little more than five years through increased income tax collections alone.
Applications are now being accepted for the 2010 Life Sciences Tax Incentive Program via the center’s website (www.masslifesciences.com). Completed applications are due by July 2 at noon. We are eager to receive applications from qualified companies in the Central Massachusetts region. An information session will be held on May 25 at Massachusetts Biomedical Initiatives (MBI) at Gateway Park, 4th Fl., 60 Prescott St. in Worcester. For more details on the information session, e-mail arodricks@masslifesciences.com.
Susan Windham-Bannister is president & CEO of the Massachusetts Life Sciences Center.
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