To amend the Internal Revenue Code of 1986 to increase the taxes on certain alcoholic beverages and to provide additional funds for alcohol abuse prevention programs.

May 22, 2003

Ms. NORTON introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To amend the Internal Revenue Code of 1986 to increase the taxes on certain alcoholic beverages and to provide additional funds for alcohol abuse prevention programs.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Alcohol Tax Equalization Act of 2003'.

SEC. 2. INCREASE IN EXCISE TAXES ON WINE AND BEER TO ALCOHOLIC EQUIVALENT OF TAXES ON DISTILLED SPIRITS.

(a) WINE-

(1) WINES CONTAINING NOT MORE THAN 14 PERCENT ALCOHOL- Paragraph (1) of section 5041(b) of the Internal Revenue Code of 1986 (relating to rates of tax on wines) is amended by striking `$1.07' and inserting `$2.97'.

(2) WINES CONTAINING MORE THAN 14 (BUT NOT MORE THAN 21) PERCENT ALCOHOL- Paragraph (2) of section 5041(b) of such Code is amended by striking `$1.57' and inserting `$4.86'.

(3) WINES CONTAINING MORE THAN 21 (BUT NOT MORE THAN 24) PERCENT ALCOHOL- Paragraph (3) of section 5041(b) of such Code is amended by striking `$3.15' and inserting `$6.08'.

(b) BEER-

(1) IN GENERAL- Paragraph (1) of section 5051(a) of such Code (relating to imposition and rate of tax on beer) is amended by striking `$18' and inserting `$37.67'.

(2) SMALL BREWERS- Subparagraph (A) of section 5051(a)(2) of such Code (relating to reduced rate for certain domestic production) is amended by striking `$7' each place it appears and inserting `$26.67'.

(c) EFFECTIVE DATE- The amendments made by this section shall take effect on January 1, 2004.

(d) FLOOR STOCKS TAXES-

(1) IMPOSITION OF TAX-

(A) IN GENERAL- In the case of any tax-increased article--

(i) on which tax was determined under part I of subchapter A of chapter 51 of the Internal Revenue Code of 1986 or section 7652 of such Code before January 1, 2004, and

(ii) which is held on such date for sale by any person,

there shall be imposed a tax at the applicable rate on each such article.

(B) APPLICABLE RATE- For purposes of clause (i), the applicable rate is--

(i) $1.90 per wine gallon in the case of wine described in paragraph (1) of section 5041(b) of such Code,

(ii) $3.29 per wine gallon in the case of wine described in paragraph (2) of section 5041(b) of such Code,

(iii) $2.93 per wine gallon in the case of wine described in paragraph (3) of section 5041(b) of such Code, and

(iv) $19.67 per barrel in the case of beer.

In the case of a fraction of a gallon or barrel, the tax imposed by subparagraph (A) shall be the same fraction of the amount of such tax imposed on a whole gallon or barrel.

(C) TAX-INCREASED ARTICLE- For purposes of this subsection, the term `tax-increased article' means wine described in paragraph (1), (2), or (3) of section 5041(b) of such Code and beer.

(2) EXCEPTION FOR CERTAIN SMALL WHOLESALE OR RETAIL DEALERS- No tax shall be imposed by paragraph (1) on tax-increased articles held on January 1, 2004, by any dealer if--

(A) the aggregate liquid volume of tax-increased articles held by such dealer on such date does not exceed 500 wine gallons, and

(B) such dealer submits to the Secretary (at the time and in the manner required by the Secretary) such information as the Secretary shall require for purposes of this subparagraph.

(3) LIABILITY FOR TAX AND METHOD OF PAYMENT-

(A) LIABILITY FOR TAX- A person holding any tax-increased article on January 1, 2004, to which the tax imposed by paragraph (1) applies shall be liable for such tax.

(B) METHOD OF PAYMENT- The tax imposed by paragraph (1) shall be paid in such manner as the Secretary shall prescribe by regulations.

(C) TIME FOR PAYMENT- The tax imposed by paragraph (1) shall be paid on or before June 30, 2004.

(4) CONTROLLED GROUPS-

(A) CORPORATIONS- In the case of a controlled group of corporations, the 500 wine gallon amount specified in paragraph (2) shall be apportioned among the dealers who are component members of such group in such manner as the Secretary shall by regulations prescribe. For purposes of the preceding sentence, the term `controlled group of corporations' has the meaning given to such term by subsection (a) of section 1563 of such Code; except that for such purposes the phrase `more than 50 percent' shall be substituted for the phrase `at least 80 percent' each place it appears in such subsection.

(B) NONINCORPORATED DEALERS UNDER COMMON CONTROL- Under regulations prescribed by the Secretary, principles similar to the principles of subparagraph (A) shall apply to a group of dealers under common control where 1 or more of such dealers is not a corporation.

(5) OTHER LAWS APPLICABLE-

(A) IN GENERAL- All provisions of law, including penalties, applicable to the comparable excise tax with respect to any tax-increased article shall, insofar as applicable and not inconsistent with the provisions of this section, apply to the floor stocks taxes imposed by paragraph (1) to the same extent as if such taxes were imposed by the comparable excise tax.

(B) COMPARABLE EXCISE TAX- For purposes of subparagraph (A), the term `comparable excise tax' means--

(i) the tax imposed by section 5041 of such Code in the case of wine, and

(ii) the tax imposed by section 5051 of such Code in the case of beer.

(6) DEFINITIONS- For purposes of this subsection--

(A) IN GENERAL- Terms used in this paragraph which are also used in subchapter A of chapter 51 of such Code shall have the respective meanings such terms have in such subchapter.

(B) PERSON- The term `person' includes any State or political subdivision thereof, or any agency or instrumentality of a State or political subdivision thereof.

(C) SECRETARY- The term `Secretary' means the Secretary of the Treasury or his delegate.

SEC. 3. INDEXATION OF TAX RATES APPLICABLE TO ALCOHOLIC BEVERAGES.

(a) GENERAL RULE- Subpart E of part I of subchapter A of chapter 51 of the Internal Revenue Code of 1986 is amended by inserting before section 5061 the following new section:

`SEC. 5060. INDEXATION OF RATES.

`(a) GENERAL RULE- Effective during each calendar year after 2004, each tax rate set forth in subsection (b) shall be increased by an amount equal to--

`(1) such rate as in effect without regard to this section, multiplied by

`(2) the cost-of-living adjustment for such calendar year determined under section 1(f)(3) by substituting `calendar year 2003' for `calendar year 1992' in subparagraph (B) thereof.

Any increase determined under the preceding sentence shall be rounded to the nearest multiple of 1 cent.

`(b) TAX RATES- The tax rates set forth in this subsection are the rates contained in the following provisions:

`(1) Paragraph (1) of section 5001(a).

`(2) Paragraphs (1), (2), (3), (4), and (5) of section 5041(b).

`(3) Paragraphs (1) and (2)(A) of section 5051(a).'

(b) TECHNICAL AMENDMENT- Paragraphs (1)(A) and (2) of section 5010(a) are each amended by striking `$13.50' and inserting `the rate in effect under section 5001(a)(1)'.

(c) CLERICAL AMENDMENT- The table of sections for subpart E of part I of subchapter A of chapter 51 of such Code is amended by inserting before the item relating to section 5061 the following new item:

`Sec. 5060. Indexation of rates.'

SEC. 4. SUBSTANCE ABUSE PREVENTION TRUST FUND.

(a) GENERAL RULE- Subchapter A of chapter 98 of the Internal Revenue Code of 1986 (relating to establishment of trust funds) is amended by adding at the end the following new section:

`SEC. 9511. SUBSTANCE ABUSE PREVENTION TRUST FUND.

`(a) CREATION OF TRUST FUND- There is established in the Treasury of the United States a trust fund to be known as the `Substance Abuse Prevention Trust Fund', consisting of such amounts as may be appropriated or credited to such Trust Fund as provided in this section or section 9602(b).

`(b) TRANSFERS TO TRUST FUND- There are hereby appropriated to the Substance Abuse Prevention Trust Fund amounts equivalent to the additional taxes received in the Treasury under chapter 51 by reason of the amendments made by sections 2 and 3 of the Alcohol Tax Equalization Act of 2003 and the additional taxes received in the Treasury by reason of section 2(d) of such Act.

`(c) EXPENDITURES FROM TRUST FUND- Amounts in the Substance Abuse Prevention Trust Fund shall be available, as provided in appropriation Acts, for appropriation to--

`(1) the Substance Abuse and Mental Health Services Administration, and

`(2) the National Highway Traffic Safety Administration,

for alcohol abuse prevention programs.'

(b) CLERICAL AMENDMENT- The table of sections for subchapter A of chapter 98 is amended by adding at the end the following new item:

`Sec. 9511. Substance abuse prevention trust fund.'

END