Publication 216, The First 100 Years


The Alcoholic Beverage Tax

Two new taxes were assigned to the Board in 1933: the Alcoholic Beverage Tax and the Motor Vehicle Transportation License Tax. Prior to the Prohibition Amendment of 1918, the licensing, controlling, and taxing of intoxicating beverages were left entirely in the hands of local government. Later, in 1933, when the repeal of Prohibition seemed close at hand and the federal government began allowing the sale of beers and light wines, the State Legislature enacted three bills regarding alcoholic beverages. These included two Alcoholic Beverage Excise Tax Acts, and one Liquor Control Act, which would become effective upon the repeal of the Prohibition Amendment.

There was some dispute as to whether the state or the local governments should control the sale of alcoholic beverages, but a 1934 amendment settled the issue by giving the state exclusive rights to the taxation, licensing, and control of liquor.79 The amendment stated that the “State Board of Equalization shall have the exclusive power to license the manufacture, importation, and sale of intoxicating liquors in this state, and to collect license fees or occupation taxes on account thereof and shall have the power in its discretion, to deny or revoke any specific liquor license if it shall determine for good cause that the granting or continuance of such a license would be contrary to public welfare or morals.” 80

This amendment and a subsequent court ruling prompted the Legislature to pass the Alcoholic Beverage Control Act in 1935. This act, which superseded the alcoholic beverage legislation of 1933, imposed an excise tax on the sale of alcoholic beverages. Naturally, the administration of this tax fell to the State Board of Equalization. The Controller became the collector of the tax while the Board of Equalization became both the assessor and enforcer of the tax.

The newly acquired “police powers” added a new dimension to the Board of Equalization, but the responsibilities thus acquired would prove burdensome and politically explosive. In the years to follow, the Board would have to spend much of its time exercising and defending its liquor control powers, and ultimately relinquish them on January 1, 1955 to the newly created Alcoholic Beverage Control Board.

79 California Constitution, Art XX, sec 22, adopted November 6, 1934

80 lbid.