Bill Aims to Retain Low Tax on Drinks

SACRAMENTO — Armed with a parliamentary maneuver often used to push controversial bills through the Legislature without debate, an Assembly member is pressing to have sweetened alcohol drinks declared the equivalent of beer so liquor companies can avoid the dramatically higher tax on distilled spirits.

If signed into law, the bill would rebuff Atty. Gen. Bill Lockyer, who wants the soda-like beverages to be treated the same as hard liquor, in part because they are especially popular among underage girls.

Sometimes called "alcopop" or flavored malt beverages, the drinks are a hybrid of beer and hard liquor and include Mike's Hard Lemonade, Smirnoff Ice, Bacardi Silver and Skyy Blue.

Though the alcohol in the drinks comes from both a malt base and the distilled spirit flavorings that are added, California treats these products like beer, taxing them at 20 cents per gallon instead of the $3.30-a-gallon rate for distilled spirits. The products can also be sold at an estimated 24,000 businesses in California, including 7-Eleven and other convenience stores, that do not sell distilled spirits.

Lockyer argues that the products fit under California's legal definition of distilled spirits. He wrote to the state Board of Equalization and the Department of Alcoholic Beverage Control in May asking them to reclassify the drinks. A recent study by the state Board of Equalization found that such a change would discourage consumption of the drinks and generate an estimated $40 million a year in additional tax revenue.

Studies show the drinks, which contain roughly the same amount of alcohol as beer, are especially popular with teenage drinkers. A December 2004 survey by the American Medical Assn. found that, by age 18, a third of girls have tried flavored malt beverages and that 82% of teen girls who have tried them find them better tasting than beer and other alcoholic drinks.

"Flavored malt beverages are sweet-tasting alcoholic drinks that mimic familiar nonalcoholic beverages like cola, lemonade, iced tea and fruit-flavored water," Lockyer wrote to the state tax board. "Many

To combat Lockyer's effort, the alcohol industry sought help from lawmakers. Even though the legislative deadline for introducing new bills was Feb. 22, on Aug. 22 Assemblyman Greg Aghazarian (R-Stockton) found a way to submit a bill that would keep the flavored drinks from being reclassified.