US: Diageo trashes California FMB reclassification plan
The state's tax administrator, the Board of Equalization, is pushing to have flavoured malt beverages (FMB), such as Smirnoff Ice, reclassified as distilled spirit beverages. The change would see the tax rate on Diageo's Smirnoff Ice brand leap by around 1,550%. The Board of Equalization has claimed that the proposal has been introduced to combat underage drinking in California, a charge Diageo has dismissed as "ludicrous".
The classification change has been forwarded to the Governor's Office of Administrative Law in California, although earlier this month the office sent the proposal back to the Board of Equalization for further review.
Speaking to just-drinks today (26 February), a spokesperson for Diageo in the US said that changing the classification of FMBs in the state was "a misnomer".
"FMBs represent around 3% of the beer category in California," the spokesperson said. "It's such a small segment. The attempt to reclassify is ludicrous. This will do nothing to stop underage drinking.
"In fact, in California, underage drinking continues to trend downwards, and we're very proud of the part we've played in helping that happen," the spokesperson added.
The Board of Equalization has until September to re-file its reclassification proposal to the Office of Administrative law. However, there is a hearing in California on the matter next month, followed by a 15-day comment period.
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