Tax on Alcopop Isn’t so Sweet
The state of California and activists groups are outraged … at Smirnoff Ice. Smirnoff, along with Mike’s Hard Lemonade and other so-called “alcopops,” are in the cross-hairs of state legislation that will tax the beverages as spirits or liquor instead of beer, which was supposed to rake in $38 million in revenue for the state, according to The Los Angeles Times.
The problem is that the makers of “alcopop” are not playing along. All of the companies have claimed that they’ve reformulated their drinks to fit within the less-taxed beer category. However, they are simultaneously refusing to reveal these new formulas, claiming that they are proprietary and secret.
If you’re a man and think this doesn’t apply to you, think again. This isn’t a debate about whether Mike’s Hard Lemonade is a “wussy drink” or that it “doesn’t get you drunk, bro” (two literal quotations that I have sadly heard before). This is really an issue at the forefront of a larger topic that could affect every drink: alcohol discrimination.
That’s right — discrimination. California has gotten itself into a widely publicized budget pickle and is now looking for revenue anywhere it can. Alcohol, being one of the few products that often sell better during a recession or depression, seems like a natural target for a new tax — in this case, a 20-percent spirit tax on “alcopops.”
The biggest part of this higher tax and blow-hard outrage comes from the naivety and idiocy of California politicians. There are a bunch of less-than-convincing supporters of this tax with less-than-convincing arguments.
In The Los Angeles Times, Mike Scippa, a supporter of the tax from the alcohol industry-monitoring Marin Institute, said, “We’re suspicious. These drinks are not beer. They don’t taste like it, smell like it or look like it. But they are being sold like beer.”
If he means they are refrigerated and sold near beer, then yes, he is correct. But I don’t think anyone would mistake a bright yellow six-pack of Mike’s Hard Lemonade or a foggy white six-pack of Smirnoff Ice for beer. Even if you haven’t been in a liquor store since 2000 and you read the package, it wouldn’t even advertise itself as beer.
Jim Mosher, another consultant quoted by the Los Angeles Times, said the refusal of the “alcopop” companies to provide their formulas is “an outrage.”
My question to Jim Mosher is, “What the hell are you going to do with the formula if you got it?” If it has a combination of alcohols that you don’t like, are you, mid-level consultant and most likely non-chemist, going to tell Smirnoff how to reformulate its beverage to make them taxable as a spirit? It’s a lose-lose proposition for Smirnoff to reveal its formula, both from a competition standpoint and a tax-liability standpoint. Apparently, the federal government agrees as well because the Alcohol and Tobacco Tax and Trade Bureau, the only federal agency that does have the formulas, is refusing to hand them over to this state board.
You don’t think Mosher’s done yet, though, do you? He finishes with, “They consider protecting industry trade secrets more important than protecting the public’s health.” Whoa, hold on there, tiger. There are slippery-slope arguments and then there are unfounded diatribes like this. This never was about public health. This was a semantic argument over which taxable category “alcopops” should be placed in.
Do you actually think that alcohol companies are going to narrowly market? Of course not—they market to as wide a demographic as they can. Usually for beer companies, it’s just straight men; girls in bikinis are meant to lure in more than just the 18 to 24-year-old demographic. Wine adverts are usually targeted at people who entertain friends at their homes, yet another huge demographic. Unless Smirnoff was offering 20 percent-off coupons at Abercrombie or Claire’s with purchase, I think it’s hard to make the case that its advertising campaigns were targeted at an underage demographic.
Young people know that “alcopops” are alcohol. Do you really think little Sally just thought she was drinking six bottles of lemonade with her friends at a house party? If she really didn’t know it was alcohol, then Governor Arnold Schwarzenegger’s solution of putting large, impossible-to-miss labels on “alcopops” that say “Contains Alcohol” should have fixed this by now, right?
All of this also ignores perhaps the biggest silver bullet. There are plenty of people who want alcohol that doesn’t taste like alcohol. Such drinks are called “mixed drinks,” and they’ve been around for hundreds of years. I’ve got a proposition for this board: How about they not only tax Smirnoff Ice, but they tax makers of juice, vermouth, grenadine, tonic, sours, bitters, cordials and every other ingredient that makes alcohol not taste like alcohol. Now do you see how ridiculous this tax is?
However, I have to admit that I am relishing in all of this. California legislators have left the state’s budget in a mess. Now they’re trying to dig themselves out of it, and they’re already proving their ineffectiveness by having one of their brilliant taxes usurped by a simple, unenforceable loophole. And now they’re angry. Guess they’ll have to find another industry to bully for money.
Michael Boileau is a third-year political science major. He can be reached at firstname.lastname@example.org.