SECTION 1. TEMPORARY SUSPENSION OF 4.3 CENTS OF FUEL TAX RATES.

    (a) In General.--Section 4081 of the Internal Revenue Code of 1986 
(relating to imposition of tax on gasoline and diesel fuel) is amended 
by adding at the end the following new subsection:
    ``(f) Temporary Suspension of 4.3 Cents of Fuel Tax Rates.--
            ``(1) In general.--During the temporary rate reduction 
        period, each rate of tax referred to in paragraph (2) shall be 
        reduced by 4.3 cents per gallon.
            ``(2) Rates of tax.--The rates of tax referred to in this 
        paragraph are the rates of tax otherwise applicable under--
                    ``(A) subsection (a)(2)(A) (relating to gasoline 
                and diesel fuel),
                    ``(B) sections 4091(b)(3)(A) and 4092(b)(2) 
                (relating to aviation fuel),
                    ``(C) section 4042(b)(2)(C) (relating to fuel used 
                on inland waterways),
                    ``(D) paragraph (1) or (2) of section 4041(a) 
                (relating to diesel fuel and special fuels),
                    ``(E) section 4041(c)(2) (relating to gasoline used 
                in noncommercial aviation), and
                    ``(F) section 4041(m)(1)(A)(i) (relating to certain 
                methanol or ethanol fuels).
            ``(3) Comparable treatment for compressed natural gas.--No 
        tax shall be imposed by section 4041(a)(3) on any sale or use 
        during the temporary rate reduction period.
            ``(4) Comparable treatment under certain refund rules.--In 
        the case of fuel on which tax is imposed during the temporary 
        rate reduction period, each of the rates specified in sections 
        6421(f)(2)(B), 6421(f)(3)(B)(ii), 6427(b)(2)(A), 
        6427(l)(3)(B)(ii), and 6427(l)(4)(B) shall be reduced by 4.3 
        cents per gallon.
            ``(5) Coordination with highway trust fund deposits.--In 
        the case of fuel on which tax is imposed during the temporary 
        rate reduction period, each of the rates specified in 
        subparagraphs (A)(i) and (C)(i) of section 9503(f)(3) shall be 
        reduced by 4.3 cents per gallon.
            ``(6) Temporary rate reduction period.--For purposes of 
        this subsection, the term `temporary rate reduction period' 
        means the period after the date of the enactment of this 
        subsection and before January 1, 1997.''
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 2. FLOOR STOCK REFUNDS.

    (a) In General.--If--
            (1) before the date of the enactment of this Act, tax has 
        been imposed under section 4081 or 4091 of the Internal Revenue 
        Code of 1986 on any liquid, and
            (2) on such date such liquid is held by a dealer and has 
        not been used and is intended for sale,
there shall be credited or refunded (without interest) to the person 
who paid such tax (hereafter in this section referred to as the 
``taxpayer'') an amount equal to the excess of the tax paid by the 
taxpayer over the amount of such tax which would be imposed on such 
liquid had the taxable event occurred on such date.
    (b) Time For Filing Claims.--No credit or refund shall be allowed 
or made under this section unless--
            (1) claim therefor is filed with the Secretary of the 
        Treasury before the date which is 6 months after the date of 
        the enactment of this Act, based on a request submitted to the 
        taxpayer before the date which is 3 months after such date of 
        enactment, by the dealer who held the liquid on such date of 
        enactment, and
            (2) the taxpayer has repaid or agreed to repay the amount 
        so claimed to such dealer or has obtained the written consent 
        of such dealer to the allowance of the credit or the making of 
        the refund.
    (c) Exception For Fuel Held In Retail Stocks.--No credit or refund 
shall be allowed under this section with respect to any liquid in 
retail stocks held at the place where intended to be sold at retail.
    (d) Definitions.--For purposes of this section, the terms 
``dealer'' and ``held by a dealer'' have the respective meanings given 
to such terms by section 6412 of such Code.
    (e) Certain Rules To Apply.--Rules similar to the rules of 
subsections (b) and (c) of section 6412 of such Code shall apply for 
purposes of this section.

SEC. 3. FLOOR STOCKS TAX.

    (a) Imposition of Tax.--In the case of any liquid on which tax was 
imposed under section 4081 or 4091 of the Internal Revenue Code of 1986 
before January 1, 1997, and which is held on such date by any person, 
there is hereby imposed a floor stocks tax of 4.3 cents per gallon.
    (b) Liability for Tax and Method of Payment.--
            (1) Liability for tax.--A person holding a liquid on 
        January 1, 1997, to which the tax imposed by subsection (a) 
        applies shall be liable for such tax.
            (2) Method of payment.--The tax imposed by subsection (a) 
        shall be paid in such manner as the Secretary shall prescribe.
            (3) Time for payment.--The tax imposed by subsection (a) 
        shall be paid on or before June 30, 1997.
    (c) Definitions.--For purposes of this section--
            (1) Held by a person.--A liquid shall be considered as 
        ``held by a person'' if title thereto has passed to such person 
        (whether or not delivery to the person has been made).
            (2) Gasoline and diesel fuel.--The terms ``gasoline'' and 
        ``diesel fuel'' have the respective meanings given such terms 
        by section 4083 of such Code.
            (3) Aviation fuel.--The term ``aviation fuel'' has the 
        meaning given such term by section 4093 of such Code.
            (4) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury or his delegate.
    (d) Exception for Exempt Uses.--The tax imposed by subsection (a) 
shall not apply to gasoline, diesel fuel, or aviation fuel held by any 
person exclusively for any use to the extent a credit or refund of the 
tax imposed by section 4081 or 4091 of such Code is allowable for such 
use.
    (e) Exception for Fuel Held in Vehicle Tank.--No tax shall be 
imposed by subsection (a) on gasoline or diesel fuel held in the tank 
of a motor vehicle or motorboat.
    (f) Exception for Certain Amounts of Fuel.--
            (1) In general.--No tax shall be imposed by subsection 
        (a)--
                    (A) on gasoline held on January 1, 1997, by any 
                person if the aggregate amount of gasoline held by such 
                person on such date does not exceed 4,000 gallons, and
                    (B) on diesel fuel or aviation fuel held on such 
                date by any person if the aggregate amount of diesel 
                fuel or aviation fuel held by such person on such date 
                does not exceed 2,000 gallons.
        The preceding sentence shall apply only if 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 paragraph.
            (2) Exempt fuel.--For purposes of paragraph (1), there 
        shall not be taken into account fuel held by any person which 
        is exempt from the tax imposed by subsection (a) by reason of 
        subsection (d) or (e).
            (3) Controlled groups.--For purposes of this subsection--
                    (A) Corporations.--
                            (i) In general.--All persons treated as a 
                        controlled group shall be treated as 1 person.
                            (ii) Controlled group.--The term 
                        ``controlled group'' 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 persons under common control.--
                Under regulations prescribed by the Secretary, 
                principles similar to the principles of subparagraph 
                (A) shall apply to a group of persons under common 
                control where 1 or more of such persons is not a 
                corporation.
    (g) Other Law Applicable.--All provisions of law, including 
penalties, applicable with respect to the taxes imposed by section 4081 
of such Code in the case of gasoline and diesel fuel and section 4091 
of such Code in the case of aviation fuel shall, insofar as applicable 
and not inconsistent with the provisions of this subsection, apply with 
respect to the floor stock taxes imposed by subsection (a) to the same 
extent as if such taxes were imposed by such section 4081 or 4091.

SEC. 4. OFFSETTING REDUCTIONS IN DEFENSE BUDGET AUTHORITY.

    (a) Required Reduction.--Not later than 20 days after the date of 
the enactment of this Act, the Secretary of Defense shall cancel 
available budget authority in current defense procurement accounts in 
such amounts as may be necessary to achieve a reduction in the amount 
of $2,900,000,000 in outlays by the Department of Defense from such 
accounts during the period beginning on the date of the enactment of 
this Act and ending at the close of December 31, 1996.
    (b) Identification of Programs To Be Cut.--The Secretary of Defense 
shall submit to Congress a report specifying the programs, projects, 
and activities of the Department of Defense from which cancellations of 
budget authority are made for the purposes of subsection (a). Such 
report shall show the specific dollar amount of budget authority 
cancelled from each such program, project, or activity.
    (c) Effect of Cancellations.--Amounts cancelled under this section 
shall not be available for obligation for any purpose.
    (d) Definitions.--For purposes of this section:
            (1) available budget authority.--The term ``available 
        budget authority'' means amounts appropriated before the date 
        of the enactment of this Act for the Department of Defense that 
        remain available for obligation as of such date.
            (2) Current procurement accounts.--The term ``current 
        defense procurement accounts'' means appropriation accounts 
        provided under the major heading ``PROCUREMENT'' in any Act 
        making appropriations for the Department of Defense that was 
        enacted before the date of the enactment of this Act and for 
        which, with respect to any such account, the period of 
        availability for obligation has not expired as of such date.
Amends the Internal Revenue Code to reduce, from the date of enactment of this Act until January 1, 1997, the rates of tax on gasoline, diesel and aviation fuel, fuel used on inland waterways, special motor fuels, and certain methanol or ethanol fuels.  Prohibits the imposition of tax on compressed natural gas during that period. Reduces, for taxes imposed during that period, the rates regarding: (1) certain aviation fuel; (2) gasoline used in trains and certain buses and diesel fuel used in trains; and (3) alcohol fuels in provisions defining the Highway Trust Fund financing rate.  Provides for the treatment of floor stocks. 
Directs the Secretary of Defense to:  (1) cancel budget authority in current defense procurement accounts as necessary to achieve a reduction of $2.9 billion in Department of Defense outlays; and (2) report to the Congress on the programs, projects, and activities from which cancellations are made.
To amend the Internal Revenue Code of 1986 to suspend the 4.3-cent general revenue portion of the fuel excise taxes.