California Moves to Hike Tax on Alcopops?

August 24, 2007

California’s State Board of Equalization voted 3-2 on Tuesday to raise the liquor tax on “alcopops”—sweetened alcoholic drinks—to the level of distilled spirits. Many of these drinks have an alcoholic volume of 4 to 7 percent (compared to as much as 40 percent for distilled spirits), and the tax hike will raise the tax from about 2 cents per bottle to 31 cents.

The decision shows the difficulty of sorting out a range of products into two strict taxing categories. State law taxes liquor and beer, and many states have had trouble deciding how these hybrid products fit. The process for making them approximates beer more than hard liquor, and their alcoholic content is much lower. One dissenting board member called the classification “irrational.” (A board member voting yes seemed to ignore this in the belief that she had the power to impose stigma on teenage drinking: “The ruling will send a signal to youth that these drinks are hard liquor because they have costs similar to hard liquor.”)

The Board premised its decision on paternalism. According to the Los Angeles Times:

The 3-2 vote came eight months after a group of teenagers from around the state petitioned the Board for the higher tax.

“I was tired of seeing my peers drink these products,” said Jimmy Jordan, an 18-year-old from the Sacramento area who helped draft the petition. “I was tired of seeing people drinking and doing dumb things.”

As we’ve written before, using the tax system as a mechanism to shape individual behavior to conform to one group’s vision of society is problematic. Everyone has outcomes they would like to encourage and discourage, and they are often conflicting. And if the goal is to reduce deaths caused by youth alcoholism, there are more direct means of achieving that than a poorly targeted excise tax on certain politically unpopular products or industries.


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