OTTAWA — The federal government is poised to boost the tax incentives for Canadian film and television production, a move meant partly to check Arnold Schwarzenegger's determination to stop American production from running to Canada.

Finance Minister John Manley and Heritage Minister Sheila Copps will announce as early as next week that the tax credits for Canadian labour involved in film and television will be increased, The Globe and Mail has learned.

Now, productions that qualify can write off labour expenses up to a limit of 48 per cent of their total production costs. Under the new rules, they will be able to write off up to 60 per cent of their total costs.

The amendments don't directly target Hollywood or confront head-on the California governor-elect's promise to quash runaway production. But they do make it more lucrative for foreign companies to work with a Canadian production team to film movies or television shows in Canada.

The move will cost the federal government between $8-million and $10-million a year. It will become effective the day the announcement is officially made, and can apply to production costs incurred any time during the 2003 fiscal year.

The changes to the tax credit are also an attempt to make it easier for Canadian film and television producers to qualify. The amendments clarify when in the production cycle companies can become eligible for the credit. And they attempt to tie the credit more closely to Canadian content, as opposed to ownership structure.

The changes come just months after Mr. Manley enriched the tax incentives for foreign films produced in Canada. In the last budget, the Finance Minister increased the writeoff to 16 per cent from 11 per cent on qualified Canadian labour costs.

But he stopped short of extending better writeoffs to the domestic industry. That's because there was no agreement among Canadian production, writers' and union groups about how Ottawa should improve the system, government officials say.

At the time, Mr. Manley indicated he would top up the tax incentives for Canadian productions as soon as the interest groups could reach an agreement. This fall, they did form a consensus and asked Ottawa to expand the base of the credit and increase its rate — moves that would cost about $20-million a year.

Next week, Ottawa will grant them half their wishes, by expanding the base. Officials have hinted that an increase in the rate is in the works too, at a value of about $10-million annually, but that approval will have to come from the next prime minister's government.

The Canadian film and television industry made productions worth $5.1-billion in its fiscal 2001-02, the same as a year earlier. Of that, $2.1-billion was certified as Canadian content.

The industry supports 53,000 direct jobs and 84,800 indirect jobs, according to the annual report of the Canadian Film and Television Production Association.

The Canadian film and television industry is in stiff competition internationally to attract film production through tax incentives.

The strong Canadian dollar has been a deterrent over the past few months, industry representatives say.

Coupled with a weaker demand in international markets for foreign and Canadian productions, financing levels are much reduced, the association told the House of Commons finance committee last month.