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Oscar-nominated actor/writer Sarah Polley arrived on Parliament Hill on Thursday to protest against a provision now before the Senate banking committee that could cut off tax benefits for film and TV productions that contain graphic sex, violence or other content that the government finds offensive.

“If there's something artists fear, it's censorship,” Ms. Polley said Thursday at a press conference.

“Part of the responsibility of being an artist is to create work that will inspire dialogue, suggest that people examine their long-held positions and, yes, occasionally offend in order to do so.”

Ms. Polley, who will testify before the committee later Thursday, is in Ottawa with a high-profile group of Canadian writers, producers, directors and actors. They are taking the federal government to task for trying to push through an amendment to the Income Tax Act.

The group says that if Bill C-10 is passed, it could force artists to self-censor or to go abroad to work. Ms. Polley has also said that the proposed rules threaten the financial foundation of Canada's film and TV industry.

Ms. Polley, whose feature-film directorial debut, Away from Her, was nominated this year for two Academy Awards, was joined at a press conference by actor Wendy Crewson (24, Air Force One) and screenwriter Rebecca Schechter, president of the Writers Guild of Canada.

“This will put a chill on the entire TV and film industry,” Ms. Schechter said, adding that the tax credits are designed as an incentive to hire Canadian workers.

Equally upsetting to Canada's cultural sector is the fact that the legislation, criticized as a "morality hammer," applies only to Canadian TV and film projects. Hollywood and other foreign productions that apply for tax credits get a free pass.

Ms. Polley and other opponents say rules already exist under the Criminal Code to protect against investment in films featuring excessive pornography or hate.

The provision is buried in an omnibus bill that is primarily intended to implement the taxation of non-resident trusts and foreign-investment entities and implement amendments to the Income Tax Act.

Last week, Heritage Minister Josée Verner said she would wait a full year to wield new powers to deny film and television producers tax credits – should those powers be granted to her.

Under the amended legislation, the government would be able to pull financial aid for any film or TV show it deems to have crossed a line, even if other government agencies, such as Telefilm Canada, have already invested in them.

Ms. Verner told the committee that she would ask members of the entertainment industry to draft guidelines to establish what would not qualify for the credits, and how those guidelines should be applied.

But sources in the production, legal and business community say that the proposed guidelines have already been drafted and a copy circulated internally. Ms. Verner's office denies those reports.

With a report from Gayle MacDonald