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Council News Release

4/2/2012  11:35:00 AM
Nate Van Duzer, Councilmember Burgess, 206-684-8806
Dana Robinson Slote, (206) 615-0061

Councilmember Tim Burgess

Seattle City Council moves to strengthen Seattle's life sciences industry
Legislation will waive city B&O tax on government research funds

SeattleThe City Council today will introduce legislation (Council Bill 117438) to waive the City's business and occupation tax on government research and development funding of Seattle companies and nonprofit organizations in the growing life sciences sector.

"This legislation recognizes the significance of the life sciences sector and will help it grow in our City," said Councilmember Tim Burgess, chair of the Council's Government Performance and Finance Committee. "Research and development funds from the federal and state governments can lead to medical breakthroughs that treat diseases and improve care in Seattle and around the world. Waiving the tax on these funds is smart and compassionate. It will create jobs and save and improve lives."

The life sciences industry is one of the fastest growing industries in the City and the greater region. Between 2007 and the first quarter of 2011, jobs in this sector grew nearly nine percent statewide.

"We appreciate the City's efforts to ensure that Seattle's tax policy supports, not hinders, our efforts to increase jobs and medical research and advancement in Seattle," said Dr. James Hendricks, president of Seattle Children's Research Institute and Chair of the Board of the Downtown Seattle Association. "The life sciences and biotech sectors are big bright spots in Seattle's economy and with this legislation we are well positioned to attract additional government funding and expand medical research."

Government funds helped researchers at Children's validate that a single dose of the H1N1 (swine flu) vaccine was effective, a finding that essentially doubled the amount of available vaccine since it was originally believed that double dosing was necessary. Government funds are also allowing Kineta, Inc., a Seattle biotech company that advances treatments for autoimmune diseases and viral diseases, to collaborate with scientists at the University of Washington to develop a broadly acting anti-viral drug that may be the future penicillin for viral diseases. It is one of several lines of research for Kineta, which has grown from 8 to 22 employees since 2007.

The Council is moving to clarify the City's tax code after confusion arose last year on whether government funding received by life sciences companies and nonprofit organizations was subject to local taxation.

"Seattle is in the vanguard of biotech innovation and should put every available dollar of these research funds toward improving and saving lives," said Council President Sally J. Clark. "We're fortunate to have so many global health leaders so close."

"In life sciences, government funds are an all-but-essential bridge between basic research and private capital support," said Erik Nilsson, president of Insilicos, a company that conducts biomarker analytics of laboratory data. "Removing the B&O tax on these funds will help startup companies grow past their early, most vulnerable phase."

The proposed bill is the first step in the Council's review of City tax policies to ensure fairness and effectiveness. Further study will focus on steps that simplify business reporting and compliance with the tax code and maintain City services while improving the business climate in Seattle.

The Government Performance and Finance Committee will first consider the life sciences tax waiver legislation at its meeting on Wednesday, April 4, at 9:30 a.m. in Council Chambers.

Seattle City Council meetings are cablecast and Webcast live on Seattle Channel 21 and on the City Council's website. Copies of legislation, Council meeting calendar, and archives of news releases can be found on the City Council website. Follow the Council on Twitter and on Facebook.

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