Toronto filmmakers say tax legislation being proposed by the federal government could seriously curb the production industry in this city.

The Senate is reviewing a bill that would allow the federal government to cancel tax credits for films and TV shows thought to be offensive or not in the public interest.

Ron Haney, who represents 1,600 Ontario members of the Directors Guild of Canada, said the film industry in Toronto is already struggling to survive because of the high Canadian dollar.

"[The bill] will cost jobs and drive away production, it will create an atmosphere of uncertainty and unpredictability and therefore those investment dollars and projects aren't going to come to Ontario."

He said the negative impact of the bill would not be limited to the film and television industries, but could affect Toronto's economy as a whole.

"Those shows contribute billions of dollars to our city."

Ontario filmmakers are outraged that their movies could be screened for offensive material, he said, and "subjected to some government-mandated moral judgment."

The amendment to Bill C-10, which has already been passed in the House of Commons, would allow the heritage minister to deny tax credits for Canadian productions, even if federal agencies such as Telefilm and the Canadian Television Fund have invested in the production.

Unions and arts organizations are writing the federal government to demand that they drop the proposal, which they say amounts to censorship and neuters the creative essence of filmmaking.

"It's already hard enough to get edgy work made," said Toronto filmmaker Bruce LaBruce.

He has counted on federal money to produce his films, many of which have been seen around the world. His latest, The Raspberry Reich, includes sexually explicit scenes that might not pass a government litmus test for appropriate material.

The Director's Guild said the proposed legislation would scrutinize Canadian productions from acclaimed producers such as Toronto-born David Cronenberg and Atom Egoyan, as well as the popular television series Degrassi: The Next Generation, a drama about students from a Toronto high school that deals with raw, sometimes explicit, teen issues like abortion and drug use.