Biochem tax credit pitched by economic agency
Thursday, October 23, 2014
The state's economic development agency will pitch a new tax credit aimed at biochemical production during Iowa's next legislative session, which begins in January. The tax credit would be geared toward companies that use chemicals derived from ethanol production, but are not used for fuel.
"This credit would explicitly exclude the production of biodiesel and ethanol," Tim Whipple, general counsel for the Iowa Economic Development Authority Board, said. "We have incentives for that already. We don't need any additional."
For example, companies producing ethanol or other fuels from corn also produce a lot of corn oil. The tax credit, Whipple said, would give companies an incentive to use that oil or other chemicals in making de-icer, plastics or other products.
Authority Director Debi Durham said the tax credit would not be meant for "anchor" companies, such as Cargill and Archer Daniels Midland. Both have plants in Iowa.
Instead, she said, the tax credit should appeal to "supply chain companies" that can take chemicals created during processes used by Cargill and ADM and turn them into something else.
Whipple and Durham said they are still working out the specifics of the proposed legislation, such as how much the state would offer to companies. They will likely recommend setting aside $20 million for the tax incentives.
Durham will propose that the money come from the authority's existing tax credit cap of $170 million. She said that means lawmakers would not have to appropriate new funds for the biochemical tax credit.
"Knowing that this industry is one that we should own in this state, I think, makes it even more compelling of why we should try this for a few years," Durham said.
The tax credit would fit with other efforts to make Iowa a hub for bioscience companies. Economic development groups in central Iowa have started the Cultivation Corridor, an organization aimed at bringing more companies to the region between Ames and Des Moines.