Nationals leader Barnaby Joyce has rubbished a Grattan Institute proposal to introduce a soft drink tax in Australia, saying it is a "bonkers mad" idea that would restrict individual freedom and harm the local sugar industry.

In a report released on Wednesday former Department of Health head Stephen Duckett called for the government to introduce an excise tax of 40 cents per 100 grams of sugar on all non-alcoholic, water-based drinks.

The tax, based on those implemented in countries such as the United Kingdom and Belgium, would raise an estimated $500 million a year and generate a fall of about 15 per cent in the consumption of sugar-sweetened beverages.

Mr Joyce said the proposal was a "moralistic tax" that would cause "massive problems" for the local sugar industry in Queensland and NSW.