The Santa Barbara Vintners have been working on a wine business improvement district (BID) for two years.
Their first proposal was a 2 percent tax on all direct to consumer (DTC) wine sales, which would include wine clubs, tasting rooms, wine merchandise sales, food sales, winemaker’s dinners, and weddings. The 2 percent tax would not apply to wholesale wine sales to grocery stores, wine shops, hotels, and restaurants (the trade), despite the law’s requirement that the funds raised be used for the “direct benefit” of those paying the tax. Wholesale sales to the trade are mostly made by the large wineries.
The funds raised would be used to promote Santa Barbara wines to consumers and sales to the trade. In other words, the small mom-and-pop, 10,000-case wineries would be paying for the large wineries’ marketing costs to the trade.
This initial tax proposal was not met with a lot of enthusiasm. The Vintners, to make it more appealing, reduced the 2 percent to 1 percent saying the county had provided the Vintners with the wrong tax information, and only 1 percent was needed.
This second proposal of 1 percent received pushback from wine club members who said, “You tell us we are ‘special’ and part of your wine ‘family,’ so why are we paying a 1 percent tax the same as someone who is not a wine club member?”
The Vintners then conducted a “survey,” which asked, “Do you favor a 1 percent on all wine sales or 1.5 percent on tasting room sales, which would include food, wine merchandise, etc., sales but not wine club or sales to the trade?” Noticeably, “none of the above” was not a survey choice. Allegedly 60 percent voted for the 1.5 percent tax on tasting room sales. The Vintners have refused to report how many wineries responded.
The Vintners then scheduled an “informational” meeting with the Board of Supervisors on Aug. 18. The auditor-controller’s staff report, which was issued around Aug. 14, said the 1.5 percent “may not be practical or feasible.” Nevertheless, the Vintners went ahead with the Board of Supervisors “informational” meeting on the 18th having their Sacramento consultant make a presentation as well as several Vintners board members. Some of the supervisors expressed concern about the self-reporting and the inability to verify and audit the 1.5 percent.
On Sept. 3, the Vintners announced they were scrapping their third wine BID proposal—the 1.5 percent on tasting room sales—and would later propose 1 percent on all DTC sales, which would include wine club sales but not wholesale wine sales to the trade. So, the mom-and-pop small wineries will still have to pay for the large wineries’ promotion and marketing costs to the trade.
What is the Vintners’ problem? It is structural. There are 270 bonded wineries in Santa Barbara County. The Vintners’ website list 78 wineries as members. Yet the Vintners want to tax the 192 wineries who are not members. Is there any surprise that the wine BID’s taxation without representation is being opposed? Where are Sam and John Adams when you need them?
Stephen Pepe
Lompoc
This article appears in Sep 17-24, 2020.