A bill giving tax breaks to new and expanding South Carolina companies has been tempered by lawmakers worried that the incentives might be too successful and would seriously deflate the state's tax intake.

If approved by the Legislature, the bill passed by the House Ways and Means Committee this week would give tax credits to businesses that increase their cargo through the state's public ports.

The proposed trade incentive could end up costing the state more than $56 million a year in tax revenue, according to a legislative study.

To prevent that, the committee passed an amendment Monday that would cap the state's total handouts at $8 million a year, with tax credits being doled out to companies on a first-come, first-served basis for any given tax year. The state's Coordinating Council for Economic Development would have authority to hand out another $2 million in credits at its discretion.

The incentive, similar to ones implemented years ago in Virginia and Georgia, has been touted as South Carolina's best chance to lure job-rich companies and retail distribution centers to settle in this state instead of neighboring states. Maritime leaders also have lobbied for the incentive, arguing that it is vital to help the Port of Charleston keep its cargo volume ahead of growing ports in Savannah and Norfolk.

The bill would allow companies to choose either a $500 job tax credit for every job they create or a 2 percent investment tax credit if they build or expand their facilities. The catch is that they have to increase their exports or imports through South Carolina's harbors by at least 5 percent over the course of a year.

William C. Gillespie, chief economist for the state Board of Economic Advisors, told lawmakers last week that if left unchecked, investment tax credits could suck a whopping $141 million from the state budget over the course of a single year.

"Fortunately, this amount would not happen," Gillespie said, because state restrictions already limit each company to a 6 percent credit, if they increase cargo movement by 15 percent, and it can be applied to only half of a company's total tax liability.

Lawmakers have put further restrictions on the bill by creating the $10 million cap and limiting individual companies to job credits of no more than $1,500 per new employee."Increasing volume through the port by 5 percent does not appear to be a very high threshold," Gillespie said in a letter to the House committee. "For this reason, many companies could become eligible for the credit."

"Even Wal-Mart could become eligible for the credit," Gillespie said.

A study done by the Board of Economic Advisors found that companies in South Carolina invested almost $2.8 billion last year by expanding their facilities or building new ones. About 85 percent of those businesses already export or import products through the Port of Charleston or have the potential to do so.

Port officials say they're relying on the trade incentive to help boost interest in South Carolina as a locale for huge distribution centers for retailers such as Wal-Mart and Home Depot, which would provide thousands of jobs in the state and bulk up business at the Port of Charleston.

In recent years, many companies have expressed interest in moving their facilities to the Palmetto State but have passed it up for more lucrative incentive packages in neighboring areas.

Georgia gives a $1,250 tax break per new job or a 5 percent investment tax credit to any company that increases port cargo by 10 percent. North Carolina waives some business taxes -- up to 50 percent or $2 million -- for port customers whose cargo wharfage and handling fees exceed the state's average for three years in a row.

The incentives seem to have worked, at least in Georgia. By 2002, 14 super-sized distribution centers had opened in the state, flooding the Port of Savannah with cargo traffic and helping make it a serious competitor for the Port of Charleston.

Bernard S. Groseclose, chief executive of South Carolina's State Ports Authority, told members of the ports board recently that he thought state economists had focused on the loss of tax revenue while overlooking the potential the tax credits might have to build new business -- and generate more tax dollars -- in the state.

John Hassell, president of the Maritime Association of the Port of Charleston, has been one of the most outspoken proponents of the credits. He said the changes legislators have made in recent weeks are fine with port backers, and would put South Carolina on par with what other states are doing to recruit big business.