Wednesday, 25 June 2008

California "Stealth Tax" Magic

A friend who works on the Hill tipped me off to an attempt in California to pass what Americans for Tax Reform calls a "stealth tax" on flavored malt beverages.
The proposal in question reclassifies flavored malt beverages as “distilled spirits” rather than “beer” as designated by current code. Various groups have launched this campaign to change the way in which flavored malt beverages are regulated, and subsequently taxed, based on the false premise that doing so will reduce underage drinking.
According to Americans for Tax Reform, "reclassification would result in a whopping tax increase on flavored malt beverages from 20 cents to $3.30 and prevent over 35,000 stores that currently sell flavored malt beverages from doing so."

For its next trick, I suppose, California's Board of Equalization will make black white and up down. As brewing giant Diageo rightly points out in its lawsuit to stop the change, "malt-based flavored beer is not a distilled spirit and has been taxed as beer for decades." The proposed change has even been parodied in The Onion.

I have somewhat mixed feelings on this issue. Most "flavored malt beverages" are not of a particularly high quality anyway, and I prefer more traditional beer, but in addition to the Zimas and Mike's Hard Lemonades of the world, many fine flavored craft beers would be taxed out of reach as well. This is a blatantly dishonest attempt at revenue collection, and would be akin to using a chainsaw to perform brain surgery.

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