Teen Drinking Targeted: Board Hikes Tax on ‘Alcopops’ to Curb Their Appeal

By Danielle McNamara, The Sacramento Bee, Calif.

Aug. 15–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 Board of Equalization voted 3-2 to classify the beverages as distilled spirits, which will raise the tax rate from 20 cents per gallon — the rate for beer — to the liquor rate of $3.30 per gallon.

A coalition of youth and adult advocates statewide, which rallied Monday in front of the board building, had petitioned the board a year ago for public meetings, saying the drinks, such as Mike’s Hard Lemonade, Smirnoff Ice and Bacardi Silver, are marketed to youth and promote underage drinking.

In 2003, 68 percent of students questioned in a survey published by the California attorney general’s office had drunk alcohol by the time they were 16 years old. Forty-three percent had had alcohol by the time they turned 14 and 16 percent by age 12.

Board member Betty Yee said during the meeting Tuesday that although the regulation raises department staffing and funding issues, “the board’s action today is just the beginning of work to reduce underage consumption of flavored malt beverages.”

Bill Leonard and Michelle Steel, who voted against the regulation, disagreed with the majority’s approach on curbing teen drinking.

“An obvious unintended consequence” of the regulation would be to “drive teenagers to beer and wine,” Leonard said.

Advocates believe the tax increase will make the beverages — also known as “alcopops” for their sweet, soda-like taste — too expensive for underage drinkers. The drinks could become less accessible because convenience stores with beer and wine licenses may not be able to sell the sweet concoctions.

Jimmy Jordan, a member of the California Youth Council and recent Elk Grove High School graduate, said the decision is a strong first step toward limiting access to the drinks, which are popular among teen girls. Jordan said he tried one of the fruity drinks as a freshman.

“My biggest motivation is not wanting to see my friends get peer-pressured like I did,” he said.

The beverages get their sweet taste from flavoring — which can contain distilled alcohol — that’s added to a beer-like concoction. They have about the same alcohol content as beer.

Opponents of the tax hike — brewers, retailers and grocers groups — argued that the increase would only drive teens to other alcohol and economically burden small retailers and restaurants with expensive liquor licenses. They also say their products don’t fall under the state definition of a distilled spirit because a majority of the alcohol comes from traditional beer-making products such as malt.

“Reclassifying flavored malt beverages will do absolutely nothing to stop underage drinking or even quell it,” said Gary Galanis of Diageo, which owns Smirnoff Ice. “You have to go after access.”

Marc Sorini, a lawyer representing the opponents, said as a taxing entity, the board should not try to make social policy. He said the groups want to work with the state to address the problem of underage drinking, but “this is not the forum, the time or the place.”

In 2005, Gov. Arnold Schwarzenegger — citing the need for more public discussion — vetoed a bill that would have permanently capped the tax for “alcopops” at the lower level.

“It’s not going to solve the problem (of underage drinking) but it’s a significant step toward curbing it,” said Judy Walsh-Jackson, head of the California Coalition on Alcopops and Youth. “Because we know that when price goes up, consumption goes down.”

The Office of Administrative Law must review and seek public comment on the regulation before it can become final in early 2008. Because it will take time to implement the reclassification, the tax increase is not scheduled to go into effect until July 2008, said Board of Equalization spokeswoman Anita Gore.

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