German chems disappointed as govt freezes R&D incentives

10 September 2010 16:05  [Source: ICIS news]

TORONTO (ICIS)--Germany’s chemical industry is disappointed by a government move to freeze, for the time being, tax incentives for research and development (R&D), an industry trade group said on Friday.

Gerd Romanowski, general manager of the science and technology portfolio at German chemical industry trade group VCI, said it was regrettable that the government would sacrifice tax measures to promote R&D because of the need for budget savings.

The value of fiscal incentive to promote R&D was beyond doubt, he said.

He went on to say that Chancellor Angela Merkel’s Christian Democrat-Liberal government, which took office last September, had noted the importance of R&D in its official coalition agreement.

“We do hope that this [freeze] is not the final word on this file,” Romanowski said.

The plan to freeze R&D tax incentives became clear on Friday when the government responded to an opposition party’s parliamentary request for an answer - a process known as “Grosse Anfrage” in Germany's lower house, the Bundestag, VCI said.

Romanowski said almost all OECD countries used fiscal tax measures to promote R&D. Such measures were an important  competitive advantage for producers in those countries.

Germany’s chemical industry was a highly R&D-intensive sector, he added.

Last year, Germany-based chemical firms spent over €8bn ($10bn) on the development of new products and processes. About 10% of the industry’s jobs were in R&D laboratories, he said.

Earlier this month, VCI also criticised a government move to cut breaks on eco-energy taxes, warning of a mistake in industrial policy that would threaten the country's future chemical investments.

Frankfurt-based VCI represent some 1,650 Germany-based chemical firms.

($1 = €0.79)

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By: Stefan Baumgarten
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