The film and TV industry raised the alarm Thursday on newly revealed tax-credit legislation that threatens draconian censorship and disruption to current Canadian financing models.

‘The government is overstepping its bounds and interfering in an arm’s-length process. Withholding public funding for film and television productions it deems offensive is a dangerous direction for this government that smacks of censorship,’ says Stephen Waddell, national executive director of ACTRA, on news that Ottawa plans to pull public funding for offensive Canadian film and TV product.

The Senate is considering changes to the federal Income Tax Act that would allow the heritage minister to deny public money for cultural material deemed excessively violent, sexual or hateful.

Industry players were especially alarmed that the proposed legislation could deny certification by CAVCO, and thus tax credits, well after a project had been financed, produced and distributed into the marketplace.

‘That shows a pretty shocking ignorance regarding how films are financed in Canada,’ Mark Musselman, VP of business affairs at Serendipity Point Films, says of Bill C-10, which could force producers to repay investment from Telefilm Canada or the Canadian Television Fund, for example, because their projects were denied CAVCO certification.

‘Any kind of post-facto review or determination that a particular film or TV production is not eligible represents a non-starter for us,’ as producers and financiers, says Musselman.

The proposed amendments are at first glance innocuous. The government proposes to add a line that indicates public financial support for a film and TV production should ‘not be contrary to public policy.’

The changes to the Act further call on the heritage minister to appoint a committee of bureaucrats, possibly from the departments of Heritage and Justice, to view potentially offensive material, and then to report back to the minister on whether they should be eligible for refundable tax credits.

The Department of Canadian Heritage went into damage control mode Thursday as it attempted to fend off charges of censorship.

‘Some have claimed that the department is banning or restricting cultural works. This is not the case. It’s our responsibility to ensure that public funds are not invested in certain types of material, such as hate propaganda, excessively violent material or pornography,’ said Annette Gibbons, associate director general of cultural industries at Heritage during a hastily arranged conference call.

When asked whether the proposed tax-credit changes would make Canadian film and TV financing even more difficult to achieve, Gibbons offered little solace to shocked producers.

‘This will apply to very few productions, so there will not be a lot of people in an uncertain position,’ she said.

Gibbons promised industry consultation regarding the changes to Bill C-10, and a transition period to help producers adjust, but only after the legislation passed through the House of Commons.

She added that the new requirements would not affect American productions that shoot in Canada.

But there’s concern that the financing of future official coproductions that involve Canadian and foreign partners could be impacted if the prospect of a denial of CAVCO certification produces a creative or financial chill.

David Zitzerman, an entertainment lawyer with Goodmans LLP in Toronto, says the proposed amendment about cultural investment by Ottawa not contravening public policy was originally considered by the then-Liberal government in 2003, but was abandoned on grounds that it would exceed the authority of the Income Tax Act.

He says that the current Conservative government is betting that Parliament passing the same amendment will allow it to grant the heritage minister authority to deny film and TV production funding on grounds of taste and morality.

Zitzerman adds Ottawa is ‘well-intentioned’ with its proposed legislation to limit precious taxpayer funds for offensive material.

‘I’m sure that’s what is driving the initiatives. But as a lawyer, I have to say the road to hell is paved with good intentions. At the minimum, they [the government] should be doing public consultation,’ he argued.

The Directors Guild of Canada called the proposed amendment both vague and unnecessary.

‘This provision is open to such a wide array of interpretations that it would have a dampening effect on artistic expression and, of equal if not greater importance, would discourage investment in an already under-resourced Canadian film and television production sector,’ wrote Brian Anthony, national executive director and CEO of the DGC, in a letter to Heritage Minister Josée Verner.

‘We feel that there are sufficient checks and balances at the disposal of the federal government, such as the criminal code, to ensure that its resources are appropriately invested,’ he added.