No tax sops for firms which outsource: Obama

 
Obama’s comments came close on the heels of the Ohio state Governor passing an executive order to ban outsourcing, a development that has raised concerns in India that is often described as the world’s back office.

Significantly, Obama’s policy speech on economy came in Ohio itself, where he made clear his determination to end tax loopholes that provide incentives for investment in overseas jobs, saying he will provide a generous tax credit to companies that create more jobs in the US.

“One of the keys to job creation is to encourage companies to invest more in the United States. But for years, our tax code has actually given billions of dollars in tax breaks that encourage companies to create jobs and profits in other countries,” Obama said at Cleveland.

The president said he was determined to change that.

“I want to change that. Instead of tax loopholes that incentivise investment in overseas jobs, I’m proposing a more generous, permanent extension of the tax credit that goes to companies for all the research and innovation they do right here in America,” he said, with Ohio Governor Ted Strickland standing by his side.

“Outsourcing jobs does not reflect Ohio values,” Strickland said in a statement after he signed the executive order.

Reacting to the order, the Indian IT sector, which gets 60 per cent of its export revenue from the US, termed the move as discriminatory and said it amounts to a trade barrier.