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Governor Insists On Discussing R&D Bill In Second Extraordinary Legislative Session
Legislature Considering Five More Bills, Including Turning July 25 Into A Holiday Requiring Store Closings
By MARIALBA MARTINEZ
July 17, 2003
On July 12, the last day of the extraordinary legislative session, House Treasury Committee President Francisco Zayas Seijo recalled a bill that would provide a special tax deduction to exempt companies conducting research & development (R&D) in Puerto Rico.
As of press time Monday, Gov. Sila Calderon had been pushing the Legislature to hold a second extraordinary session to consider six bills, including No. 3695.
Bill No. 3695 would offer exempt companies a special 2-to-1 tax deduction on research, investigation, development, or manufacturing investments for new products, new uses of or improvements to products, and pharmaceutical drugs medical or clinical trials. Industry sources said R&D investments by global pharmaceutical companies could reach $30 billion this year, a 200% increase from 10 years ago, when it topped $10 billion.
Last Monday, Zayas Seijo told CB, "We were ready to approve House Bill No. 3695 until La Fortaleza decided to kill the International Banking Entities [IBEs] bill that would have contributed approximately $25 million to the governments budget. The House worked hard on the IBE bill and now we stand to lose $25 million. Which brings us to this R&D bill, which could lead to $60 million or more in tax deductions.
"In addition, the Puerto Rico Industrial Development Co. [Pridco] sent the original R&D bill without amendments to the Senate and it was approved. The bills recall was an economic issue," continued Zayas Seijo. "If [the budget] were similar to what it was during Pedro Rossellos administration, it would be another situation. But with the deficits and the lean budget that we have, the bill cant be approved at this time. We will take another look at the bill during the next legislative session."
News about the bills recall was disappointing to Puerto Rico Manufacturers Association Executive Vice President William Riefkohl. "For the past 20 to 30 years, we have dreamed of developing an R&D industry in Puerto Rico," said Riefkohl.
He explained that a products development process has many components. "It begins with an idea followed by the creation of prototypes that must be tested," he said. "After years of preliminary tests, the product then goes through medical or clinical trials to evaluate its efficiency. After this step, the product might come to Puerto Rico to be manufactured and marketed.
"Puerto Rico has only inserted itself in the last two steps of the development sequence," continued Riefkohl. "The only way we can grow is to go back to the previous steps, the clinical trials. Then we can tie the project to the islands manufacturing and marketing processes."
House Vice Speaker Ferdinand Perez Roman also expressed displeasure with the bills recall, though he said he would participate in the bills discussion when the Legislature is back in session. "This is a commitment of this administration and I fully support the bill," he said. We will make sure that it strikes a balance fiscally and that the economic and academic sectors are integrated into the process."
The second extraordinary legislative session, to have begun on Tuesday, would also include discussions on bills to transfer the Preference Board from the General Services Administration to Pridco, assign $6 million to the Puerto Rico Institute of Culture for the renovation of the Matienzo and Music Hall theaters, and assign $60 million to the Health Reform program.
A bill to fold the Puerto Rico Economic Development Bank into the Puerto Rico Government Development Bank would also be presented, along with a project by Senate President Antonio Fas Alzamora to declare July 25, Commonwealth Constitution Day, a holiday that would require all stores to close. Legislative sources said the latter bill could cost local companies approximately $6 million.
This Caribbean Business article appears courtesy of Casiano Communications.