02 January 2013 23:28 [Source: ICIS news]
HOUSTON (ICIS)--Several US chemical trade groups lauded Congress on Wednesday for averting the fiscal cliff with the passage of a bill that prevented about $600bn (€456bn) in tax increases and spending cuts from taking effect at the start of 2013, although they cautioned that the federal budgetary problems have not been resolved.
US lawmakers approved a bill late on Tuesday to delay $109bn in spending cuts for two months. It also extended existing middle-class tax cuts and tax credits for working families, as well as raised taxes for the wealthy.
“Avoiding the potential recession that could be caused by an across the board sequestration is good for the American economy and the business of chemistry,” the American Chemistry Council (ACC) said.
The extension of the tax credit is a “key provision that will help foster America’s manufacturing renaissance and plays an important role in ensuring a pro-growth environment for the US business of chemistry”, the ACC added.
The Society of Chemical Manufacturers and Affiliates (SOCMA) said the industry will benefit from the extension of tax credits for research and development (R&D) until the end of 2013. Furthermore, the extension is retroactive for all of 2012.
“This action will provide a benefit to many SOCMA members that invest their resources to design and develop new technologies,” said Lawrence Sloan, the group’s president and CEO. “Extending the R&D tax credit has been a high priority of SOCMA’s for many years.”
Sloan added that SOCMA members’ employees will also benefit from the permanent extension of the Bush tax cuts for families making $450,000 or less.
While the National Association of Chemical Distributors (NACD) said it is pleased that a “nose dive off [the] fiscal cliff has been avoided”, it is concerned the deal creates higher tax burdens for many of its members that are small businesses.
“We need fundamental spending and tax reform addressing the country’s fiscal needs while allowing small businesses to grow and prosper, not carry the burdens of our debit unilaterally,” NACD president Chris Jahn said.
“Congress never fails to disappoint even in times of fiscal crisis in this case, by using taxpayers’ money to prop up a politically correct renewable energy industry that would otherwise be non-existent without government subsidises,” said Charles Drevna, president of the American Fuel & Petrochemical Manufacturers (AFPM).
Although the bill has provided the nation with some relief, the resolution is only temporary.
“The not-so good news is that the agreement continues the nation’s economic uncertainty because it pushes off decisions on federal budgetary spending cuts for another two months, thereby leaving manufacturers to guess which areas of the economy Congress and the president will target their spending reductions,” Sloan said.
“Meanwhile, long-term decisions on such key manufacturing priorities as tax and regulatory reform are delayed further by the continuation of the fiscal cliff debate,” Sloan added.
SOCMA said Congress needs to step fix the “overly complicated tax code”, particularly in regards to the manufacturing sector.
Whatever the solution is, the trade groups agreed that Congress must address the upcoming debt ceiling and spending cuts in a timely manner.
“It is critical that Congress and the White House come together as soon as possible to resolve our nation’s ballooning deficit and the still-impending sequestration,” the ACC said. “And, vital to the long-term growth of the national economy, it is imperative that Congress remain vigilant and enact comprehensive tax reform before current extensions expire – two years come and go very quickly in Washington.”
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