Alcohol Tax Equalization Act of 1997

Summary: Alcohol Tax Equalization Act of 1997 - Amends the Internal Revenue Code to increase the rate of tax on wine and beer.  Provides for the treatment of floor stocks.  Mandates a cost-of-living adjustment for the tax rates on distilled spirits, wine, and beer. 
Establishes the Substance Abuse Prevention Trust Fund. Appropriates amounts to the Fund equivalent to the amounts received as a result of this Act.  Makes amounts in the Fund available to the Substance Abuse and Mental Health Services Administration and the National Highway Traffic Safety Administration for alcohol abuse prevention programs.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Alcohol Tax Equalization Act of 
1997''.

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, 1998.
    (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, 1998, 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, 1998, 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, 1998, 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, 1998.
            (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 
1998, 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 
        1997' 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. 9512. 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 1997 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. 9512. Substance abuse prevention 
                                        trust fund.''