Wine industry's goon bag of tax goodies

Australians are paying a billion dollars a year to subsidise goon, a new report says.

Australians are paying more in income tax than goon companies.

That's according to an independent think tank, which wants cheap wine to be taxed the same way as beer.

At the moment, cheap wine attracts only $3 in tax per litre of alcohol while bottled beer reaps ten times that at $35, and premium wine at $55.

The Australia Institute believes the unfair tax treatment is corporate welfare at its worst, with a majority of wine producers paying almost nothing.

It's estimated $1.4 billion could be raised if cheap wine was taxed the same way as other drinks, based on alcohol content rather than wholesale value.

The Foundation for Alcohol Research and Education, which commissioned the institute's report, says the tax system encourages the production of cheap alcohol targeted at problem drinkers.

"It simply beggars belief that ordinary Australians continue to foot the bill for the significant health and social costs of alcohol, while the majority of wine producers are profiting from favourable tax arrangements," chief executive Michael Thorn said in a statement.

The report, released on Thursday, proposes three alternatives for taxing cheap wine, all of which would still mean it's the cheapest alcohol available from off-licence premises.

GOON SHOW:

* Of 3800 wine producers, 3500 of them pay almost nothing in tax.

* Just 23 wine producers paid almost 90 per cent of the $800 million taxes raised.

* Cheap wine attracts $3 in tax, bottled beer $35, premium wines $55, spirits $80 per litre of alcohol.

* Beer and spirits are taxed based on their alcohol content but wine is taxed on its wholesale value.

* Alternatives: cheap wine with 12.7 per cent alcohol attract an excise of $5.44.

* Or taxed at rate midway between beer and spirits, with a litre of wine attracting excise of $7.31.

* Or tax of $3 per litre of wine, bringing Australia's taxation of wine into line with the OECD average.

Source: The Australia Institute

Source: AAP