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Thursday, January 24, 2008

Drinks & Taxes 2008 v4: New York II

New York Gov. Eliot Spitzer has put forward a proposal to increase the tax rate on malt liquor from 16 cents a gallon to $2.54 a gallon. The problem is the bill could unintentionally impact other high gravity beers.

The proposal is part of an attempt to close a budget gap in New York and it is estimated it will raise $15 million, while targeting 40-ounce sales of malt liquor that take place primarily in urban neighborhoods. The bill says it targets "flavored malt beverages" with an alcohol content of 0.5 to 24 percent. Products like Colt 45, Olde English 800 and King Cobra typical have alcohol contents in the high 5 to low 7 percent level. State officials say these brews deserve a special tax because they are hybrids of beer and spirits. The reality is that you can find much more powerful brews in bars and retail shops across New York. Somehow the Spitzer administration has convinced itself that because the word liquor is in the name malt liquor that it deserves to be taxed more like liquor, never mind that there is no distilling in the manufacturing process.

The bill excludes, beer, lager beer, ale, porter, stout and other malt based beverages, carving out flavored malt beverages for special attention. It is unclear how the state would enforce the tax and if brewers could avoid the tax by simply changing the name of their brands. Anyone up for a King Cobra Barleywine? How about a Colt 45 Imperial Pilsner?

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