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Drug, device makers get tax break in new law
Seattle Times business reporter
Washington's life-sciences industry excels at early research and development of new medical products. But when it comes to commercialization and manufacturing — elements that could bring more employment and tax revenue — the state is losing ground to its peers.
A new tax incentive to be signed into law today by Gov. Christine Gregoire aims to change that. It's one of several bill-signings on her agenda, including a tax break for aluminum smelters and a raft of tax exemptions and credits for aerospace product-development and repair.
Under the law that takes effect July 1, companies won't have to pay state and local sales and use taxes on their spending for new drug and medical-device factories built in Washington.
The tax break may help lure more investments, such as the $70 million that Berlex is spending to build a factory to manufacture a drug for Crohn's disease in South Snohomish County. The factory, which is almost finished, will employ 70 people and ensure that the company leaves another 110 local jobs.
Berlex is contemplating a second phase of the project, which could benefit from the tax incentive.
"This does provide Washington with a better competitive edge than it had in the past," said spokeswoman Cathy Keck Anderson.
Such incentives are important in attracting new companies and convincing the ones that invent products in Washington to make them here, too, said Steven Collins, a University of Washington professor who studied enticements offered by several states.
"You've got to have a tax incentive to have a seat at the table," he said. "If you don't and everyone else does, you're really at a disadvantage."
He found that Washington's employment in life-sciences manufacturing stagnated during the first part of this decade, in part, because the state isn't offering companies the kinds of financial incentives made available by North Carolina, California and Pennsylvania.
"A lot of your job growth comes when you're making products," Collins said.
"It starts opening the door of this growing sector to more people," said Deborah Knutson, president of the Snohomish County Economic Development Council.
Proponents of the tax incentive, including Collins, whose study was prepared for Knutson's group, wanted the Legislature to do more. The law was pared down from an earlier version that offered the industry a lower business and occupation tax rate and credits for job training.
Benjamin J. Romano: 206-464-2149 or firstname.lastname@example.org
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