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State Board Ups Taxes on Flavored Malt Drinks Like Smirnoff Ice

Taxes on so-called “alco-pops” -- or flavored malt beverages -- are going up. The controversial decision made by a state board on Tuesday could mean an additional $40 million for state coffers. From Sacramento, Jenny O'Mara reports.

By a vote of three-to-two, the state Board of Equalization approved a change to the way “flavored malt beverages” are taxed. Currently, drinks like Smirnoff Ice are taxed as beer at 20-cents a gallon.

The board's ruling will change that to the distilled spirits rate of $3.30.

Board of Equalization Member Judy Chu voted in favor -- she says the drinks should be taxed as spirits.

Chu : It has a fermented base of beer, but in reality it has distilled spirits flavoring and it's also heavily marketed towards youth.

Chu says the price increase will discourage underage drinkers. But Marc Sorini with the Flavored Malt Beverage Coalition says the issue should not be handled by the board.

Sorini : This is really about the law and the tax code.

Opponents say the tax increase will hurt small businesses such as family-owned restaurants.

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