CALIFORNIA VOTES TO DRAMATICALLY INCREASE TAX ON MALTERNATIVES

The California Board of Equalization voted 3-2 to tax FMBs as distilled spirits instead of beer, which will increase the tax on a six-pack of, say, Bacardi Silver or Seagram’s Cooler, by $2. Before the tax takes effect, however, the state must gather information from the alcohol industry on FMBs in California which could take up to a year. If this language is made into a law, it is scheduled to go into effect July 2008.

Current California regulations tax beer and wine at 20 cents a gallon and distilled spirits at $3.30 a gallon. The new regulation would boost the tax on a 12-ounce bottle of flavored malt beverage from 2 to 31 cents. We have a feeling that Diageo and other companies with FMBs won’t take this sitting down.

Maine is the only other state that classifies FMBs as distilled spirits, according to the LA Times. But as you know, FMBs generally contain the same amount of alcohol as beer and merely replace the “beer taste” with added flavorings.