A report has attacked the Australian government's treatment of small wineries. The Asia-Pacific Economic Cooperation report, released this week, criticised the wine equalisation tax (WET) and the way it was inflated by the GST.

Small wineries also complained about their treatment by the Australian Securities and Investments Corporation (ASIC) and the Australian Taxation Office, saying that their actions were preventing their expansion in the industry.

The boutique wine industry feels it is being undermined by WET which was introduced at the same time as the GST. Despite complaints that it was driving up wine prices, WET was set at 29%. GST is then added to wine prices on top of the WET.

The report found the boutique wine industry was concerned that it was being priced out of existence by the WET. "A number of operators commented on this disincentive to move into premium wine production, and current rebate schemes were inadequate for the sector," the report found.

ASIC and the ATO were targeted by the wine sector, arguing they demanded forecasts for future earnings and investments which were not practicable for the industry.