THE wine industry has warned of a major fall-out if the wine equalisation tax rebate is scrapped as part of the Federal Government's tax reforms.

The Winemakers' Federation of Australia says it would be a big blow for many producers struggling with over-supply pressures.

"A lot of our people are very worried," WFA's general manager of policy and government relations Andrew Wilsmore said.

He said there'd been speculation since last year's budget, that the Government might look at the WET rebate as part of future budget savings.

"The industry is already going through a major restructuring because of the worst over-supply situation in living memory," Mr Wilsmore said.

"If the WET is scrapped, it will be a massive double whammy for winemakers and grape growers."

He said the industry was dominated by six large companies and a further 60-100 medium-size producers, but there were more than 2000 other smaller winemakers, usually family run, that were important to local communities and would find it hard to continue operating without the WET rebate.

"It's not just wine-makers that would be hit, but also a lot of small regional communities that depend on wine tourism."

Winemakers can get a tax rebate of 29 per cent on the first $500,000 of local wholesale sales, including at the cellar door.

Mr Wilsmore said the Government was also considering the recommendations of its preventative health task force, which wants "harmful" alcohol taxed more heavily.

"We believe wine is different to other alcohol," he said. "It is mostly drunk in moderation, often with meals, and is not the first choice for young people."

The final report of the Henry review was submitted last month to Treasurer Wayne Swan, who is expected to release it within the next month.

A spokesman for Mr Swan said the Government would not specule about the report before then.