Nurturing Iowa's wine industry

Gazette Editorial Board

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Only a decade or so ago, the idea of an Iowa wine industry seemed far-fetched. Today, there are about 300 vineyards and 100 wineries in the state.

In the past 10 years, the number of Iowa wineries has quintupled. Iowa's wine production has grown from about 50,000 gallons to 350,000 gallons per year. The state's half-dozen “wine trails” are becoming increasingly popular with tourists.

It seems that thanks, in part, to generous tax breaks, the wine industry is taking root in Iowa.

That has some people questioning whether Iowa's wineries are paying their fair share of property tax. They say that vague rules unevenly applied are giving some Iowa wineries an unfair competitive advantage.

We can see the sense in tweaking some of the rules and in standardizing how they're applied across the state.

But legislators should be wary of making too many changes to laws that appear to have worked just as intended, unlike some other incentive schemes we could name.

When Iowa's wine industry was just beginning in earnest in 2011, legislators passed a law to classify wineries as agricultural properties for tax purposes. That allowed winemakers to pay the more favorable agricultural rate on vineyard land, processing facilities and other buildings involved in the manufacture and sale of wine.

It gave fledgling vintners a break. A recent Gazette investigation found that agricultural tax breaks saved eight of Iowa's largest wine wholesalers more than $100,000 in combined property taxes in fiscal year 2011.

But just how much they save can vary wildly from county to county, The Gazette also found. Some county assessors require growers to have vines planted on a certain number of acres, for example. Others allow winemakers to declare as agricultural buildings elaborate tasting rooms and reception halls.

There's something wrong if a vintner's competitor just across the county line can benefit from such a significantly more favorable assessment, or if a winery that hosts weddings and other large receptions can dodge tax burdens that similar venues must pay.

It's time for legislators to listen to assessors' complaints that they need more direction from the law because it is too vague.

It's just one item on a long list as lawmakers struggle with comprehensive property tax reform, but it's a worthy one.

Iowa's wine industry is flourishing so far, but it's still early in the season for most of the state's winemakers. They have made major, multiyear investments to launch their enterprises. It would be a loss to Iowa's economic growth and diversity if lawmakers simply dump the property tax breaks and let these small business owners' dreams die on the vine.

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