The proposal would increase the existing 4 percent tax credit that filmmakers can claim to 15 percent for costs incurred on O'ahu and 20 percent for production costs on other islands.

Producers of television commercials and print advertisements also would be allowed to claim the tax credits.

The measure is an attempt to compete with other locations such as Canada, Australia, New Zealand and Mexico that offer incentives to moviemakers, said Ted Liu, director of the state Department of Business, Economic Development and Tourism.

"DBEDT believes that in order for Hawai'i to regain a competitive edge that our government must take the initiative to improve upon the incentives we now currently offer," Liu said in testimony to the Senate Committees on Economic Development and Science, Art & Technology.

Among those opposed to the measure was the Tax Foundation of Hawai'i, which called the credits nothing more than "a giveaway of state funds."

"If lawmakers want to subsidize the film industry in Hawai'i, then a direct appropriation of public funds is more accountable and would subject that expenditure to public scrutiny," the foundation said.

Committee members took no immediate action on the bill, which also sets specific requirements for producers seeking to claim the credits.

The production would have to spend at least $200,000 in Hawai'i and at least 25 percent of "below-the-line" hires, such as unit production managers, location managers and script supervisors, would have to be state residents.

No more than $2 million could be claimed by a single production, and the total amount of credits by the state would be capped at $10 million. Also, productions financed with the help of Act 221, the state's high-technology tax credit, would be ineligible for the additional credits.

The bill had the support of Neighbor Island officials.