Manufacturers say they’ll divest of R&D if changes to tax credits implemented

[harpslay]

It's not the time to downgrade tax incentives for R&D

Canadian manufacturers say they will be forced to divest of their research and development initiatives if the federal government moves forward with its plan to eliminate tax credits for expenditures on physical capital.
Key Findings of CME Study

That was one of the message that came out of a study released this morning by lobby and advocacy group Canadian Manufacturers & Exporters (CME), showing 69% of manufacturers would reduce R&D activities and 18% would shift their R&D investments to other jurisdictions if the federal government exempts purchases of physical capital from the Scientific Research and Experimental Development Tax Credit (SR&ED).

[link:share.fpconversations.com/manufacturers.html|FULL STORY]

[Scuba]

1. That would be incredibly stupid, but would open the doors for others.

Without R&D, anyone who makes anything is on the same path as the buggy whip makers of yesteryear.

[napi21]

2. I suppose this is possible, but unlikelly in the US.

It would be a believaable threat, but I don't believe any US Co. would give up the oppertunity to make or save millions (or billions) by inventing a new product or uncover a way too dramatically improive efficiency.

[silverweb]

5. Exactly.

[font color="navy" face="Verdana"]R&D leads to patents and profits. I don't know if the Canadian system is much different or much the same, but in the U.S. they'd be totally bluffing if they made such a ridiculous threat.

On edit: Then again, libguard makes a very valid point below -- it may be cheaper to just buy the patent rights from others who do the R&D. In any case, the threat is still an empty one.

[xchrom]

3. Others will step up & they will lose. Nt

[libguard]

4. Manufacturers have been jettisonning R and D for years.

It doesnt pay. I asked the head of R and D whether he saw a need to expand it to get new product lines. He said, industry just buys the ideas of entreprenuers. Much cheaper that way. And so it goes.