To amend the Internal Revenue Code of 1986 to increase to 32 cents per pack the Federal excise tax on cigarettes and to provide that the revenues from the additional tax shall be deposited in the Federal Hospital Insurance Trust Fund under the Social Security Act.

Summary: Amends the Internal Revenue Code to increase the excise tax on cigarettes. 
Transfers to the Federal Hospital Insurance Trust Fund (Medicare) any revenue resulting from the increase.

SECTION 1. INCREASE IN FEDERAL EXCISE TAX ON ALL CIGARETTES.

    (a) In General.--Subsection (b) of section 5701 of the Internal 
Revenue Code of 1986 (relating to imposition of tax on cigarettes) is 
amended--
            (1) by striking ``$12 per thousand ($10 per thousand on 
        cigarettes removed during 1991 or 1992)'' in paragraph (1) and 
        inserting ``$16 per thousand'', and
            (2) by striking ``$25.20 per thousand ($21 per thousand on 
        cigarettes removed during 1991 or 1992)'' in paragraph (2) and 
        inserting ``$33.60''.
    (b) Floor Stocks.--
            (1) Imposition of tax.--On cigarettes manufactured in or 
        imported into the United States which are removed before 
        October 1, 1993, and held on such date for sale by any person, 
        there shall be imposed the following taxes:
                    (A) Small cigarettes.--On cigarettes, weighing not 
                more than 3 pounds per thousand, $4 per thousand; and
                    (B) Large cigarettes.--On cigarettes, weighing more 
                than 3 pounds per thousand, $8.40 per thousand; except 
                that, if more than 6\1/2\ inches in length, they shall 
                be taxable at the rate prescribed for cigarettes 
                weighing not more than 3 pounds per thousand, counting 
                each 2\3/4\ inches, or fraction thereof, of the length 
                of each as one cigarette.
            (2) Exception for certain amounts of cigarettes.--
                    (A) In general.--No tax shall be imposed by 
                paragraph (1) on cigarettes held on any tax-increase 
                date by any person if--
                            (i) the aggregate number of cigarettes held 
                        by such person on such date does not exceed 
                        30,000, and
                            (ii) such person 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.
                For purposes of this subparagraph, in the case of 
                cigarettes measuring more than 6\1/2\ inches in length, 
                each 2\3/4\ inches (or fraction thereof) of the length 
                of each shall be counted as one cigarette.
                    (B) Authority to exempt cigarettes held in vending 
                machines.--To the extent provided in regulations 
                prescribed by the Secretary, no tax shall be imposed by 
                paragraph (1) on cigarettes held for retail sale on any 
                tax-increase date by any person in any vending machine. 
                If the Secretary so provides with respect to any 
                person, the Secretary may reduce the 30,000 amount in 
                subparagraph (A) and the $60 amount in paragraph (3) 
                with respect to such person.
            (3) Credit against tax.--Each person shall be allowed as a 
        credit against the taxes imposed by paragraph (1) an amount 
        equal to $60. Such credit shall not exceed the amount of taxes 
        imposed by paragraph (1) for which such person is liable.
            (4) Liability for tax and method of payment.--
                    (A) Liability for tax.--A person holding cigarettes 
                on October 1, 1993, to which any 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 March 31, 1994.
            (5) Definitions.--For purposes of this subsection--
                    (A) Cigarette.--The term ``cigarette'' shall have 
                the meaning given to such term by subsection (b) of 
                section 5702 of the Internal Revenue Code of 1986.
                    (B) Secretary.--The term ``Secretary'' means the 
                Secretary of the Treasury or his delegate.
            (6) Controlled groups.--Rules similar to the rules of 
        section 5061(e)(3) of such Code shall apply for purposes of 
        this subsection.
            (7) Other laws applicable.--All provisions of law, 
        including penalties, applicable with respect to the taxes 
        imposed by section 5701 of such Code shall, insofar as 
        applicable and not inconsistent with the provisions of this 
        subsection, apply to the floor stocks taxes imposed by 
        paragraph (1), to the same extent as if such taxes were imposed 
        by such section 5701.
    (c) Effective Date.--The amendments made by subsection (a) shall 
apply to cigarettes removed after September 30, 1993.

SEC. 2. TRANSFER OF ADDITIONAL REVENUES TO FEDERAL HOSPITAL INSURANCE 
              TRUST FUND.

    (a) In General.--There are hereby appropriated for deposit into the 
Federal Hospital Insurance Trust Fund established under section 1817(a) 
of the Social Security Act amounts determined by the Secretary of the 
Treasury or his delegate to be equivalent to--
            (1) the excess of the amount of the taxes received in the 
        Treasury under section 5701(b) of the Internal Revenue Code of 
        1986 over the amount which would be so received if section 1 of 
        this Act had not been enacted, reduced by
            (2) the amount of credits or payments allowable under such 
        Code which are properly chargeable against the amount of such 
        excess.
    (b) Method of Transfer.--The amounts appropriated by subsection (a) 
shall be transferred at least monthly from the general fund of the 
Treasury on the basis of estimates made by the Secretary of the 
Treasury or his delegate of the amounts referred to in subsection (a) 
received in the Treasury. Proper adjustments shall be made in the 
amounts subsequently transferred to the extent prior estimates were in 
excess of or less than the amounts required to be transferred.