The European Commission asked EU states today to consider narrowing the differences in national alcohol tax rates to help fight smuggling.
Wide disparities in national tax rates on wine, beer and alcohol encourages fraud and distorts competition in the EU internal market, the Commission argued in a report.
"It is clear to all that the widely divergent levels of alcohol taxation in member states distort the market and facilitate fraud and smuggling," European Internal Market Commissioner Mr Frits Bolkestein said in a statement.
"A full debate is needed to establish whether there is now any consensus for improving the present situation."
Sweden, which has the highest alcohol tax in the EU and earned €1.2 billion euros in alcohol tax revenue in 2001, has pushed for the debate as its citizens flock to neighbouring EU countries to buy cheap beer and wine.
But wine producing countries, most of which have no duties on wine, are strongly opposed to any move towards higher taxes.
Since EU tax proposals require unanimous approval it is unlikely than any suggestion of tax hikes on wine would go very far, industry officials said.
The Commission's report will be submitted to finance ministers in due course.
Tax on wine can be as high as €273 per hectolitre in Ireland, €243 in Sweden and €232 in Britain. But 12 out of the 25 EU states, including Germany, Italy, Portugal and Spain, have no excise duties on wine, the report showed.