Pale shadow of the R&D tax credit

Pale shadow of the R&D tax credit - 11 May

The Government’s announced research, science and technology package will help a few and miss the rest. Grants and vouchers come hand in hand with dead weight bureaucracy. An economy wide approach using tax credits would be much more effective say the New Zealand Manufacturers and Exporters Association (NZMEA).

NZMEA Chief Executive John Walley says, “More winner picking by the Government will do little to address the underinvestment in New Zealand firms.”

“New Zealand’s ability to compete in export markets depends on the capacity to innovate. We must add value to our primary products and create niche markets for unique manufactured products. For this substantial investment is needed, and an incentive to invest in these value add areas is vital. The initiatives announced by John Key only just scratch the surface.”

“New Zealand’s tradeable sector is largely made up of small to medium sized businesses operating under the $3million revenue grant threshold; they will only have access to a cumbersome voucher system. In any event, picking winners for early stage companies is virtually impossible; why not back those that back themselves? A tax credit gives all firms access to the Research and Development (R&D) incentive and ensures that those most qualified to judge the potential success of a project, those running the firm, get to determine the merit of any R&D investment.”

“All developed nations support R&D and most, like Australia, have made this work using their tax system,” says Mr Walley. “A system that offers support to innovative firms across the board is needed to lift our traded economy.”

ENDS

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