Oscar-nominee Sarah Polley, and other prominent members of the Canadian entertainment industry, appeared before the Senate Thursday afternoon to condemn a Conservative bill they say amounted to "censorship."

Polley said Bill C-10 -- which would allow the government to refuse tax credits to film or television productions deemed offensive -- will drive filmmakers out of Canada.

On Mike Duffy Live, Polley said that the bill's definition of "offensive" is "extremely vague and dangerous to be using."

Conservatives issued a combative response - releasing a press release attacking Polley's left-wing political ties and suggesting that artists had no business telling "hard-working Canadians" how their tax dollars should be spent.

If passed, the bill would allow the Department of Heritage to block tax credits -- and therefore massive amounts of funding -- to productions deemed to be morally lacking.

"Any whiff of censorship is chilling for us," Polley said in a news conference in Ottawa before the Senate hearing.

"It's the job of artists to provoke and to challenge. 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."

The decision to deny funding would also be made only after the production was complete.

On Mike Duffy Live, Polley said that this measure would make the financing of projects very difficult.

"The idea of after that fact, taking away a huge piece of the overall financing structure would be disastrous for the industry," the "Away From Her" director said.

"We have actually heard from some banks that they will invest in a film where the overall financing structure would be so tenuous."

She also said that bill could cause artists to start self-censuring their work to nullify financing worries.

"I know very few filmmakers that would risk trying to try to make a film that was controversial or pushed the envelope or was even interesting in any way if this bill was in place," Polley told CTV's Canada AM earlier on Thursday.

Polley said the whole concept of guidelines imposed by the government is dangerous.

"I guess the question here is: who has the right to decide what is offensive?" said Polley. "In this case, I think it's really dangerous to lay that responsibility in the hands of the minister of heritage.

"I think we have arms-length organizations that make these decisions very rigorously."

She also noted that the bill includes a double standard when it comes to American films made in Canada.

"American productions would actually not be affected and their tax credits would be safe," said Polley. "Which, I think, is pretty problematic and I think shows how sloppy this bill was."

Groups representing filmmakers, actors and writers are all in Ottawa to protest the bill.

"I think we're pretty unanimous on this," said Polley. "I don't think we're going to stop anytime soon until these provisions are taken out of this bill.

'No first thought'

The film tax credit measure, as part of the 568-page Bill C-10, passed through the House of Commons with little fanfare. It seemed that the opposition parties did not notice the film measure until after the bill had passed.

But in order to become law, the bill must pass through the Senate - also known as the home of sober, second thought.

"I don't know how we can give sober second thought. There was no first thought given to this bill," said Liberal Sen. George Baker.

On Mike Duffy Live, Conservative Sen. Terry Stratton, the Chief Government Whip in the Senate, said he was open to making an amendment and sending it back to the House of Commons.

He also said the original wording of the bill dealing with the film measure went back to a position paper under the Liberal government in 2003.

Heritage Minister Josee Verner has said the new regulation would impact only a few films and has promised a one-year-grace period before the measure will be used.

She says she will work with the entertainment industry to draw up a precise definition of what projects would be deemed too offensive to receive government tax credits.

Polley attacked

While Verner appeared ready to negotiate with artists, not all Tories were in such a conciliatory mood.

In the press release, the Conservatives took specific aim at Polley. She has been a vocal NDP supporter and once lost a pair of teeth when the riot squad aggressively broke up an anti-Mike Harris demonstration outside of the Ontario Legislature.

"Individuals with vested personal and political interests should be honest with Canadians on what their true intentions are,'" said Pierre Poilievre, an Ottawa-area MP.

"Hard-working Canadians are growing increasingly tired of special interest groups telling them what to do."

With files from The Canadian Press