ICSTI calls for tax credits to boost research projects

10 Jul 2003

The Government should introduce tax credits in the area of R&D to make Ireland more attractive as a location for research. This is one of a number of funding recommendations in a statement on State Expenditure Priorities for 2004 published today by the Irish Council for Science, Technology and Innovation (ICSTI).

The Council notes that a number of countries with which Ireland competes for research projects, including France, Netherlands, Spain and the UK, already offer R&D tax credits and argues that Ireland needs to follow suit.

“Tax credits are particularly effective for large firms and for attracting mobile enterprise R&D activities. A tax credit for R&D would reduce, though not eliminate, Ireland’s competitive disadvantage as a location for internationally mobile R&D-related investment,” said Dr Ed Walsh, chairman of ICSTI.

The other funding recommendations in the Statement are as follows: National Development Plan funding for the HEA’s Programme for Research in Third Level Institutions (PRTLI) should be reinstated in 2004; third level institutions should be facilitated in loan financing the current shortfall in PRTLI funding; the enhancement of Ireland’s investment in research excellence through Science Foundation Ireland must be continued; increased support should be provided for applied research in industry and for commercialising research; and finally, €14.6m should be provided to initiate implementation of the Report and Recommendations of the Task Force on the Physical Sciences.

Commenting on the proposals, Dr Walsh, said: “The impact of the PRTLI pause is significant. It has resulted in delays in building programmes, deferral of equipment purchase and installation, including equipment part funded with private sector donors. Should Ireland fail to implement its ambitious research and innovation investment strategy under the National Development Plan questions will be raised internationally as to the seriousness and certainty of Ireland’s commitment to building a knowledge-based economy. The investment strategy is central to future job creation in an increasingly competitive Europe. PRTLI and Science Foundation Ireland must be kept on target.”

The ICSTI underlines its warning that a stop-go approach to research funding will undermine the efforts of the Higher Education Authority and Science Foundation Ireland to create a vibrant research culture. The Council argues that continuity of funding is needed for Ireland to send out a strong signal to industry and researchers at home and abroad that it is serious about developing as a knowledge and innovation-based economy. Maintaining support for research, especially during difficult economic times, is vital to retaining and creating jobs in a knowledge-driven economy, it maintains.

The Council highlights that the level of business expenditure on research and development in Ireland is low for an economy whose output and exports are dominated by high technology sectors. R&D intensity in the manufacturing sector, as measured by the level of R&D related to industrial output, continues to be poor and has declined relative to 1999 levels.

“Global competition for the location of new manufacturing and R&D facilities is intense. Similarly, the repositioning of the Irish enterprise sector higher up the economic value chain is dependent on increasing the amount and the quality of business R&D,” said Dr Walsh.

By Brian Skelly