THE price of full-strength beer and wine would rise under a sweeping overhaul of Australia's haphazard alcohol tax regime being considered by the Federal Government.

In a change that could boost the budget bottom line by as much as $2.9 billion over four years, a review of the tax system headed by Treasury boss Ken Henry is believed to recommend replacing Australia's antiquated and complex alcohol excise regime with a simpler ''volumetric'' system based on alcohol content.

The Sunday Age believes that in an acknowledgement of the health and social costs inflicted by alcohol abuse, Treasury has proposed a stepped approach, with tax rates progressively increasing according to alcohol content. The thresholds are believed be 3.5 per cent, 5 per cent, 7 per cent, 10 per cent, 15 per cent and 22 per cent.

Australia's alcohol excise regime is one of the most complex in the world, with an array of rates and rules for different alcohol products. The amount of excise on beer, for example, varies dramatically depending on whether it is sold in a keg or a bottle. Brandy is taxed at a concessional rate compared to other spirits. Small wineries receive generous tax concessions, which have been blamed for propping up uneconomic businesses and encouraging a grape glut, yet micro-breweries must directly compete with multinationals such as Fosters and Lion Nathan.

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http://www.theage.com.au/national/tax-shakeup-to-hit-beer-wine-prices-20100116-mdj1.html