The Motor and Equipment Manufacturers Association (MEMA) has called on Congress to extend and strengthen the federal research and development (R&D) tax credit, which is set to expire on December 31st.

The credit is available for qualified R&D expenditures incurred by corporations located in the United States. However, simply extending the tax credit would be insufficient to MEMA’s members, according to Ann Wilson, MEMA’s senior vp for government affairs, who said that the main challenge is getting Washington to make the tax credit permanent.

“What we need in this country is an R&D program we know will be there from year-to-year,” Wilson told Fleet Owner. When the credit is renewed on a year-to-year basis, it limits companies to allocating research and development funds past the current year. A permanent credit makes it possible to plan into the future. “That way, manufacturers can plan. They can know what it will be in 2010,” she said.

Wilson is hopeful that the program will be extended for 2008 before the holidays. However, she said that there are significant challenges ahead in making the credit permanent.

According to MEMA, motor vehicle suppliers have taken on a large portion of the motor vehicle industry’s R&D costs, investing $6.8 billion in 2003. Without such investments, the development of new technologies will be hampered and jobs will be lost.

“The development of new technologies, such as safety and fuel savings systems, is integral to the health of the domestic motor vehicle supplier industry, making the R&D tax credit an issue of great significance to MEMA’s members,” said Bob McKenna, president & CEO of MEMA. “However, despite strong bipartisan support in both the House and the Senate for extending and strengthening the R&D credit, Congress has yet to send such legislation to the president.

“The R&D credit helps MEMA members to create and retain high-wage, high-skill jobs in the United States,” McKenna said. “If the credit is not renewed, these jobs will be endangered, and our members’ ability to continue sophisticated domestic R&D programs will be greatly reduced. Failure to renew the credit will also continue to cause MEMA’s members to suffer multi-million dollar pre-tax losses.”