Australians’ health would be harmed by proposed tax changes to research and development, the nation’s peak medicines body fears.
Medicines Australia chief Elizabeth de Somer has told a Senate inquiry a tax-related bill would lead to even less investment in research and development in Australia.
“The proposed changes in the bill would be detrimental to Australia’s health and productivity at the best of times, but especially so when we are faced with the unprecedented challenge of COVID-19 and Australia’s health and economic recovery,” she said on Monday.
Ms de Somer says the changes give companies a disincentive to manufacture in Australia if they also conduct research and development.
The current system plays a big role in making Australia attractive for research and development, including clinical trials to ensure patients have early access for the latest medicines, she added.
“That includes being closer to the head of the queue if and when a COVID-19 vaccine is developed.”
The bill makes a number of changes, including getting rid of the flat premium for companies with an annual turnover above $20 million.
Instead, the premium would increase as a company’s research and development intensity does.
Respiratory disorder medical device company ResMed says such a structure makes Australia a less attractive place to invest, and creates an overly complex system for investment decisions.
Manufacturing Australia voiced the same concerns, saying manufacturing would be driven offshore and jobs would be at risk.
The Australian Investment Council said now was not the time for such changes, given the challenges being faced in the economy from coronavirus.
Lighting Council Australia said it was “ludicrous” to go ahead with the measures, accusing the government of attempting a revenue grab.
The bill also changes the maximum amount of research and development expenditure eligible for concessional tax offsets from $100 million to $150 million each year.
Officials from Treasury said the $1.8 billion benefit from the changes was being revised to take the pandemic into account.
How much the government gains from the measures over the next four years will be known by the federal budget in October.
If the proposals pass they will retrospectively apply from June 30 last year.
Australian Tax Office officials said companies should file their tax returns for this year based on the current law, noting they may have to make amendments once the bill passes.
A previous Senate committee recommended an earlier version of the bill be amended.