I

103D CONGRESS

2D SESSION H. R. 4376

To amend the Internal Revenue Code of 1986 to increase the taxes on

certain alcoholic beverages and to provide additional funds for mental

health and substance abuse benefits under health care reform legislation.

IN THE HOUSE OF REPRESENTATIVES

MAY 10, 1994

Ms. NORTON introduced the following bill; which was referred jointly to the

Committees on Ways and Means and Energy and Commerce

A BILL

To amend the Internal Revenue Code of 1986 to increase

the taxes on certain alcoholic beverages and to provide

additional funds for mental health and substance abuse

benefits under health care reform legislation.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Alcohol Tax Equali5 zation Act’’.
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1 SEC. 2. INCREASE IN EXCISE TAXES ON WINE AND BEER TO

2 ALCOHOLIC EQUIVALENT OF TAXES ON DIS3 TILLED SPIRITS.

4 (a) WINE.—

5 (1) WINES CONTAINING NOT MORE THAN 14

6 PERCENT ALCOHOL.—Paragraph (1) of section

7 5041(b) of the Internal Revenue Code of 1986 (re8 lating to rates of tax on wines) is amended by strik9 ing ‘‘$1.07’’ and inserting ‘‘$2.97’’.

10 (2) WINES CONTAINING MORE THAN 14 (BUT

11 NOT MORE THAN 21) PERCENT ALCOHOL.—Para12 graph (2) of section 5041(b) of such Code is amend13 ed by striking ‘‘$1.57’’ and inserting ‘‘$4.86’’.

14 (3) WINES CONTAINING MORE THAN 21 (BUT

15 NOT MORE THAN 24) PERCENT ALCOHOL.—Para16 graph (3) of section 5041(b) of such Code is amend17 ed by striking ‘‘$3.15’’ and inserting ‘‘$6.08’’.

18 (b) BEER.—

19 (1) IN GENERAL.—Paragraph (1) of section

20 5051(a) of such Code (relating to imposition and

21 rate of tax on beer) is amended by striking ‘‘$18’’

22 and inserting ‘‘$37.67’’.

23 (2) SMALL BREWERS.—Subparagraph (A) of

24 section 5051(a)(2) of such Code (relating to reduced

25 rate for certain domestic production) is amended by
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1 striking ‘‘$7’’ each place it appears and inserting

2 ‘‘$26.67’’.

3 (c) EFFECTIVE DATE.—The amendments made by

4 this section shall take effect on January 1, 1995.

5 (d) FLOOR STOCKS TAXES.—

6 (1) IMPOSITION OF TAX.—

7 (A) IN GENERAL.—In the case of any tax8 increased article—

9 (i) on which tax was determined

10 under part I of subchapter A of chapter 51

11 of the Internal Revenue Code of 1986 or

12 section 7652 of such Code before January

13 1, 1995, and

14 (ii) which is held on such date for sale

15 by any person,

16 there shall be imposed a tax at the applicable

17 rate on each such article.

18 (B) APPLICABLE RATE.—For purposes of

19 clause (i), the applicable rate is—

20 (i) $1.90 per wine gallon in the case

21 of wine described in paragraph (1) of sec22 tion 5041(b) of such Code,

23 (ii) $3.29 per wine gallon in the case

24 of wine described in paragraph (2) of sec25 tion 5041(b) of such Code,
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1 (iii) $2.93 per wine gallon in the case

2 of wine described in paragraph (3) of sec3 tion 5041(b) of such Code, and

4 (iv) $19.67 per barrel in the case of

5 beer.

6 In the case of a fraction of a gallon or barrel,

7 the tax imposed by subparagraph (A) shall be

8 the same fraction as the amount of such tax

9 imposed on a whole gallon or barrel.

10 (C) TAX-INCREASED ARTICLE.—For pur11 poses of this subsection, the term ‘‘tax-in12 creased article’’ means wine described in para13 graph (1), (2), or (3) of section 5041(b) of such

14 Code and beer.

15 (2) EXCEPTION FOR CERTAIN SMALL WHOLE16 SALE OR RETAIL DEALERS.—No tax shall be im17 posed by subparagraph (A) on tax-increased articles

18 held on January 1, 1995, by any dealer if—

19 (A) the aggregate liquid volume of tax-in20 creased articles held by such dealer on such

21 date does not exceed 500 wine gallons, and

22 (B) such dealer submits to the Secretary

23 (at the time and in the manner required by the

24 Secretary) such information as the Secretary

25 shall require for purposes of this subparagraph.
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1 (3) LIABILITY FOR TAX AND METHOD OF PAY2 MENT.—

3 (A) LIABILITY FOR TAX.—A person hold4 ing any tax-increased article on January 1,

5 1995, to which the tax imposed by paragraph

6 (1) applies shall be liable for such tax.

7 (B) METHOD OF PAYMENT.—The tax im8 posed by paragraph (1) shall be paid in such

9 manner as the Secretary shall prescribe by reg10 ulations.

11 (C) TIME FOR PAYMENT.—The tax im12 posed by paragraph (1) shall be paid on or be13 fore June 30, 1995.

14 (4) CONTROLLED GROUPS.—

15 (A) CORPORATIONS.—In the case of a con16 trolled group, the 500 wine gallon amount spec17 ified in paragraph (2), shall be apportioned

18 among the dealers who are component members

19 of such group in such manner as the Secretary

20 shall by regulations prescribe. For purposes of

21 the preceding sentence, the term ‘‘controlled

22 group’’ has the meaning given to such term by

23 subsection (a) of section 1563 of such Code; ex24 cept that for such purposes the phrase ‘‘more

25 than 50 percent’’ shall be substituted for the
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1 phrase ‘‘at least 80 percent’’ each place it ap2 pears in such subsection.

3 (B) NONINCORPORATED DEALERS UNDER

4 COMMON CONTROL.—Under regulations pre5 scribed by the Secretary, principles similar to

6 the principles of subparagraph (A) shall apply

7 to a group of dealers under common control

8 where 1 or more of such dealers is not a cor9 poration.

10 (5) OTHER LAWS APPLICABLE.—

11 (A) IN GENERAL.—All provisions of law,

12 including penalties, applicable to the com13 parable excise tax with respect to any tax-in14 creased article shall, insofar as applicable and

15 not inconsistent with the provisions of this

16 paragraph, apply to the floor stocks taxes im17 posed by paragraph (1) to the same extent as

18 if such taxes were imposed by the comparable

19 excise tax.

20 (B) COMPARABLE EXCISE TAX.—For pur21 poses of subparagraph (A), the term ‘‘com22 parable excise tax’’ means—

23 (i) the tax imposed by section 5041 of

24 such Code in the case of wine, and
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1 (ii) the tax imposed by section 5051

2 of such Code in the case of beer.

3 (6) DEFINITIONS.—For purposes of this sub4 section—

5 (A) IN GENERAL.—Terms used in this

6 paragraph which are also used in subchapter A

7 of chapter 51 of such Code shall have the re8 spective meanings such terms have in such

9 part.

10 (B) PERSON.—The term ‘‘person’’ includes

11 any State or political subdivision thereof, or any

12 agency or instrumentality of a State or political

13 subdivision thereof.

14 (C) SECRETARY.—The term ‘‘Secretary’’

15 means the Secretary of the Treasury or his del16 egate.

17 SEC. 3. INDEXATION OF TAX RATES APPLICABLE TO ALCO18 HOLIC BEVERAGES.

19 (a) GENERAL RULE.—Subpart E of part I of sub20 chapter A of chapter 51 of the Internal Revenue Code of

21 1986 is amended by inserting before section 5061 the fol22 lowing new section:
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1 ‘‘SEC. 5060. INDEXATION OF RATES.

2 ‘‘(a) GENERAL RULE.—Effective during each cal3 endar year after 1995, each tax rate set forth in sub4 section (b) shall be increased by an amount equal to—

5 ‘‘(1) such rate as in effect without regard to

6 this section, multiplied by

7 ‘‘(2) the cost-of-living adjustment for such cal8 endar year determined under section 1(f)(3) by sub9 stituting ‘calendar year 1994’ for ‘calendar year

10 1992’ in subparagraph (B) thereof.

11 Any increase determined under the preceding sentence

12 shall be rounded to the nearest multiple of 1 cent.

13 ‘‘(b) TAX RATES.—The tax rates set forth in this

14 subsection are the rates contained in the following provi15 sions:

16 ‘‘(1) Paragraphs (1) and (3) of section 5001(a).

17 ‘‘(2) Paragraphs (1), (2), (3), (4), and (5) of

18 section 4041(b).

19 ‘‘(3) Paragraphs (1) and (2)(A) of section

20 5051(a).’’

21 (b) TECHNICAL AMENDMENT.—Paragraphs (1)(A)

22 and (2) of section 5010(a) are each amended by striking

23 ‘‘$13.50’’ and inserting ‘‘the rate in effect under section

24 5001(a)(1)’’.

25 (c) CLERICAL AMENDMENT.—The table of sections

26 for subpart E of part I of subchapter A of chapter 51
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1 of such Code is amended by inserting before the item re2 lating to section 5061 the following new item:

‘‘Sec. 5060. Indexation of rates.’’

3 SEC. 4. MENTAL HEALTH AND SUBSTANCE ABUSE BENE4 FITS TRUST FUND.

5 (a) GENERAL RULE.—Subchapter A of chapter 98 of

6 the Internal Revenue Code of 1986 (relating to establish7 ment of trust funds) is amended by adding at the end

8 thereof the following new section:

9 ‘‘SEC. 9512. MENTAL HEALTH AND SUBSTANCE ABUSE BEN10 EFITS TRUST FUND.

11 ‘‘(a) CREATION OF TRUST FUND.—There is estab12 lished in the Treasury of the United States a trust fund

13 to be known as the ‘Mental Health and Substance Abuse

14 Benefits Trust Fund’, consisting of such amounts as may

15 be appropriated or credited to such Trust Fund as pro16 vided in this section or section 9602(b).

17 ‘‘(b) TRANSFERS TO TRUST FUND.—There are here18 by appropriated to the Mental Health and Substance

19 Abuse Benefits Trust Fund amounts equivalent to the ad20 ditional taxes received in the Treasury under chapter 51

21 by reason of the amendments made by sections 2 and 3

22 of the Alcohol Tax Equalization Act.

23 ‘‘(c) EXPENDITURES FROM TRUST FUND.—Amounts

24 in the Mental Health and Substance Abuse Benefits Trust

25 Fund shall be available, as provided in appropriation Acts,
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1 for purposes of providing mental health and substance

2 abuse benefits under health care reform legislation here3 after enacted.’’

4 (b) CLERICAL AMENDMENT.—The table of sections

5 for subchapter A of chapter 98 is amended by adding at

6 the end thereof the following new item:

‘‘Sec. 9512. Mental health and substance abuse benefits trust

fund.’’

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