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Board of Equalization raises tax on flavored malt beverages
By Danielle McNamara - Bee Staff Writer
Published 3:39 pm PDT Tuesday, August 14, 2007
The state's tax policy board voted Tuesday to tax flavored malt beverages at the same rate as liquor rather than beer, in an effort to curb underage drinking.
The California Board of Equalization approved by a 3-2 vote to classify the beverages as distilled spirits, which will raise the tax rate from 20 cents per gallon -- the rate for beer -- to the hard liquor rate of $3.30 per gallon.
Board member Betty Yee said during the packed board meeting that although the regulation raises staffing and funding issues to the department, "the board's action today is just the beginning of work to reduce underage consumption of flavored malt beverage."
Advocates believe the tax increase will make the beverages -- also known as "alcopops" for its sweet, soda-like taste -- more expensive and therefore less attractive to underage drinkers. The drinks could also become less accessible because convenience stores with beer and wine alcohol licenses may not be able to sell the sweet concoctions.
Opponents of the tax hike -- brewers, retailers and grocers groups -- argued the increase would drive teens to other alcohol and burden small retailers and restaurants that may need a more expensive liquor license. They also say their products don't fall under the state definition of a distilled spirit because a portion of the alcohol comes from fermentation.
The new tax rate is scheduled to take affect July 2008.
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