[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1056 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                S. 1056

 To amend the Internal Revenue Code of 1986 to improve tax equity for 
   the Highway Trust Fund and to reduce the number of separate taxes 
     deposited into the Highway Trust Fund, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 14, 1999

  Mr. Chafee introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to improve tax equity for 
   the Highway Trust Fund and to reduce the number of separate taxes 
     deposited into the Highway Trust Fund, and for other purposes.

    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 ``Highway Tax Equity and 
Simplification Act of 1999''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--Congress finds that--
            (1) Congress should enact legislation to correct the 
        distribution of the tax burden among the various classes of 
        persons using the Federal-aid highways, or otherwise deriving 
        benefits from such highways;
            (2) the most recent highway cost allocation study by the 
        Department of Transportation found that owners of heavy trucks 
        significantly underpay Federal highway user fees relative to 
        the costs such vehicles impose on such highways, while owners 
        of lighter trucks and cars overpay such fees;
            (3) pavement wear and tear is directly correlated with 
        axle-weight loads and distance traveled, and to the maximum 
        extent possible, Federal highway user fees should be structured 
        based on this fundamental fact of use and resulting cost;
            (4) the current Federal highway user fee structure is not 
        based on this fundamental fact of use and resulting cost; to 
        the contrary--
                    (A) the 12-percent excise tax applied to the sales 
                of new trucks has no significant relationship to 
                pavement damage or road use and does the poorest job of 
                improving tax equity,
                    (B) the heavy vehicle use tax does not equitably 
                apply to heavy trucks (such tax is capped with respect 
                to trucks weighing over 75,000 pounds) and does not 
                vary by annual mileage, thus 2 heavy trucks traveling 
                10,000 miles and 100,000 miles, respectively, pay the 
                same heavy vehicle use tax, and
                    (C) diesel fuel taxes do a poor job recovering 
                pavement costs because such taxes only increase 
                marginally with weight increases while pavement damage 
                increases exponentially with weight, and increasing the 
                rates for diesel fuel will not resolve this fundamental 
                flaw;
            (5) truck taxes based on a combination of the weight of 
        vehicles and the distance such trucks travel provide greater 
        equity than a tax based on either of these 2 factors alone; and
            (6) the States generally have in place mechanisms for 
        verifying the registered weight of trucks and the miles such 
        trucks travel.
    (b) Purposes.--The purposes of this Act are--
            (1) to replace the heavy vehicle use tax and all other 
        Federal highway user charges (except fuel taxes) with a Federal 
        weight-distance tax which is designed to yield at least equal 
        revenues for highway purposes and to provide equity among 
        highway users; and
            (2) to provide that such a tax be administered in 
        cooperation with the States.

SEC. 3. REPEAL AND REDUCTION OF CERTAIN HIGHWAY TRUST FUND TAXES.

    (a) Repeal of Heavy Vehicle Use Tax.--Subchapter D of chapter 36 of 
the Internal Revenue Code of 1986 (relating to tax on use of certain 
vehicles) is repealed.
    (b) Repeal of Tax on Heavy Trucks and Trailers Sold at Retail.--
Section 4051(c) of the Internal Revenue Code of 1986 (relating to 
termination) is amended by striking ``October 1, 2005'' and inserting 
``July 1, 2000''.
    (c) Repeal of Tax on Tires.--Section 4071(d) of the Internal 
Revenue Code of 1986 (relating to termination) is amended by striking 
``October 1, 2005'' and inserting ``July 1, 2000''.
    (d) Reduction of Tax Rate on Diesel Fuel To Equal Rate on 
Gasoline.--Section 4081(a)(2)((A)(iii) of the Internal Revenue Code of 
1986 (relating to rates of tax) is amended by striking ``24.3 cents'' 
and inserting ``18.3 cents''.
    (e) Conforming Amendments.--
            (1) Section 4221(a) of the Internal Revenue Code of 1986 
        (relating to certain tax-free sales) is amended by striking 
        ``October 1, 2005'' and inserting ``July 1, 2000''.
            (2) Subchapter A of chapter 62 of such Code (relating to 
        place and due date for payment of tax) is amended by striking 
        section 6156.
            (3) The table of sections for subchapter A of chapter 62 of 
        such Code is amended by striking the item relating to section 
        6156.
            (4) Section 9503(b)(1) of such Code (relating to transfer 
        to Highway Trust Fund of amounts equivalent to certain taxes) 
        is amended by striking subparagraphs (B) and (C) and by 
        redesignating subparagraphs (D) and (E) as subparagraphs (B) 
        and (C), respectively

SEC. 4. TAX ON USE OF CERTAIN VEHICLES BASED ON WEIGHT-DISTANCE RATE.

    (a) In General.--Chapter 36 of the Internal Revenue Code of 1986, 
as amended by section 3(a), is amended by adding at the end the 
following:

             ``Subchapter D--Tax on Use of Certain Vehicles

                              ``Sec. 4481. Imposition of tax.
                              ``Sec. 4482. Definitions.
                              ``Sec. 4483. Exemptions.
                              ``Sec. 4484. Cross references.

``SEC. 4481. IMPOSITION OF TAX.

    ``(a) Imposition of Tax.--
            ``(1) In general.--A tax is hereby imposed on the use of 
        any highway motor vehicle (either in a single unit or 
        combination configuration) which, together with the 
        semitrailers and trailers customarily used in connection with 
        highway vehicles of the same type as such highway motor 
        vehicle, has a taxable gross weight of over 25,000 pounds at 
        the rate of--
                    ``(A) the cents per mile rate specified in the 
                table contained in paragraph (2), or
                    ``(B) in the case of a highway motor vehicle with a 
                taxable gross weight in excess of the weight for the 
                highest rate specified in such table for such vehicle, 
                the cents per mile rate specified in paragraph (3).
            ``(2) Rate specified in table.--The table contained in this 
        paragraph is as follows:


--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              Cents Per Mile
                                                --------------------------------------------------------------------------------------------------------
  Taxable Gross Weight in Thousands of Pounds     2-axle   3-axle  4-axle+
                                                  single   single   single     3-axle       4-axle       5-axle       6-axle       7-axle      8-axle+
                                                   unit     unit     unit   combination  combination  combination  combination  combination  combination
--------------------------------------------------------------------------------------------------------------------------------------------------------
Over 25 to 30..................................     0.50     0.00     0.00       0.00         0.00         0.00         0.00         0.00         0.00
Over 30 to 35..................................     1.00     0.25     0.00       0.00         0.00         0.00         0.00         0.00         0.00
Over 35 to 40..................................     3.00     0.50     0.00       0.50         0.00         0.00         0.00         0.00         0.00
Over 40 to 45..................................     5.00     1.50     0.50       1.00         0.00         0.00         0.00         0.00         0.00
Over 45 to 50..................................     8.00     3.00     1.00       1.50         0.25         0.00         0.00         0.00         0.00
Over 50 to 55..................................    12.00     6.00     2.00       2.50         0.50         0.25         0.00         0.00         0.00
Over 55 to 60..................................    21.00    10.00     4.00       3.50         1.00         0.50         0.00         0.00         0.00
Over 60 to 65..................................    30.00    17.00     7.00       5.00         2.50         1.00         0.25         0.00         0.00
Over 65 to 70..................................  .......    25.00    10.00       7.50         4.00         2.00         0.50         0.00         0.00
Over 70 to 75..................................  .......    33.00    14.00      11.00         5.50         3.00         1.25         0.00         0.00
Over 75 to 80..................................  .......    41.00    19.00      17.00         7.50         3.75         2.00         0.00         0.00
Over 80 to 85..................................  .......    50.00    24.00      25.00        13.00         7.00         4.00         0.50         0.00
Over 85 to 90..................................  .......  .......    30.00  ...........      19.00        11.00         6.00         1.00         0.00
Over 90 to 95..................................  .......  .......    36.00  ...........      25.00        15.00         8.50         1.50         0.25
Over 95 to 100.................................  .......  .......    42.00  ...........  ...........      20.00        11.00         2.00         0.50
Over 100 to 105................................  .......  .......    50.00  ...........  ...........      25.00        14.00         3.50         1.00
Over 105 to 110................................  .......  .......  .......  ...........  ...........      30.00        17.00         5.00         2.00
Over 110 to 115................................  .......  .......  .......  ...........  ...........      35.00        20.00         7.00         3.00
Over 115 to 120................................  .......  .......  .......  ...........  ...........  ...........      23.00         9.00         4.00
Over 120 to 125................................  .......  .......  .......  ...........  ...........  ...........      26.00        11.00         6.00
Over 125 to 130................................  .......  .......  .......  ...........  ...........  ...........      29.00        13.00         8.00
Over 130 to 135................................  .......  .......  .......  ...........  ...........  ...........      32.00        15.00        10.00
Over 135 to 140................................  .......  .......  .......  ...........  ...........  ...........      35.00        17.00        12.00
Over 140 to 145................................  .......  .......  .......  ...........  ...........  ...........  ...........      19.00        14.00
Over 145 to 150................................  .......  .......  .......  ...........  ...........  ...........  ...........      21.00        16.00
--------------------------------------------------------------------------------------------------------------------------------------------------------


            ``(3) Rate specified in paragraph.--The cents per mile rate 
        specified in this paragraph is as follows:
                    ``(A) In the case of any single unit highway motor 
                vehicle with 2 or more axles or any combination highway 
                motor vehicle with 3 or 4 axles, the highest rate 
                specified in the table contained in paragraph (2) for 
                such vehicle, plus 10 cents per mile for each 5000 
                pounds (or fraction thereof) in excess of the taxable 
                gross weight for such highest rate.
                    ``(B) In the case of any combination highway motor 
                vehicle with 5 or 6 axles, the highest rate specified 
                in the table contained in paragraph (2) for such 
                vehicle, plus 5 cents per mile for each 5000 pounds (or 
                fraction thereof) in excess of the taxable gross weight 
                for such highest rate.
                    ``(C) In the case of any combination highway motor 
                vehicle with 7 or more axles, the highest rate 
                specified in the table contained in paragraph (2) for 
                such vehicle, plus 2 cents per mile for each 5000 
                pounds (or fraction thereof) in excess of the taxable 
                gross weight for such highest rate.
    ``(b) Determination of Number of Axles.--For purposes of this 
section--
            ``(1) In general.--The total number of axles with respect 
        to any highway motor vehicle shall be determined without regard 
        to any variable load suspension axle, except if such axle meets 
        the requirements of paragraph (2).
            ``(2) Eligibility requirements.--The requirements of this 
        paragraph are as follows:
                    ``(A) All controls with respect to the variable 
                load suspension axle are located outside of and 
                inaccessible from the driver's compartment of the 
                highway motor vehicle.
                    ``(B) The gross axle weight rating of all such 
                axles with respect to the highway motor vehicle shall 
                conform to the greater of--
                            ``(i) the expected loading of the 
                        suspension of such vehicle, or
                            ``(ii) 9,000 pounds.
            ``(3) Variable load suspension axle defined.--The term 
        `variable load suspension axle' means an axle upon which a load 
may be varied voluntarily while the highway motor vehicle is enroute, 
whether by air, hydraulic, mechanical, or any combination of such 
means.
            ``(4) Termination of exception.--The exception under 
        paragraph (1) shall not apply after June 30, 2004.
    ``(c) Determination of Miles.--
            ``(1) Use of certain toll facilities excluded.--For 
        purposes of this section, the number of miles any highway motor 
        vehicle is used shall be determined without regard to the miles 
        involved in the use of a facility described in paragraph (2).
            ``(2) Toll facility.--A facility is described in this 
        paragraph if such facility is a highway, bridge, or tunnel, the 
        use of which is subject to a toll.
    ``(d) By Whom Paid.--The tax imposed by this section shall be paid 
by the person in whose name the highway motor vehicle is, or is 
required to be, registered under the law of the State or contiguous 
foreign country in which such vehicle is, or is required to be, 
registered, or, in case the highway motor vehicle is owned by the 
United States, by the agency or instrumentality of the United States 
operating such vehicle.
    ``(e) Time for Paying Tax.--The time for paying the tax imposed by 
subsection (a) shall be the time prescribed by the Secretary by 
regulations.
    ``(f) Period Tax in Effect.--The tax imposed by this section shall 
apply only to use before October 1, 2005.

``SEC. 4482. DEFINITIONS.

    ``(a) Highway Motor Vehicle.--For purposes of this subchapter, the 
term `highway motor vehicle' means any motor vehicle which is a highway 
vehicle.
    ``(b) Taxable Gross Weight.--For purposes of this subchapter--
            ``(1) In general.--Except as provided in paragraph (2), the 
        term `taxable gross weight' means, when used with respect to 
        any highway motor vehicle, the maximum weight at which the 
        highway motor vehicle is legally authorized to operate under 
        the laws of the State in which it is registered.
            ``(2) Special permits.--If a State allows a highway motor 
        vehicle to be operated for any period at a maximum weight which 
        is greater than the weight determined under paragraph (1), its 
        taxable gross weight for such period shall be such greater 
        weight.
    ``(c) Other Definitions and Special Rule.--For purposes of this 
subchapter--
            ``(1) State.--The term `State' means a State and the 
        District of Columbia.
            ``(2) Use.--The term `use' means use in the United States 
        on the public highways.

``SEC. 4483. EXEMPTIONS.

    ``(a) State and Local Government Exemption.--Under regulations 
prescribed by the Secretary, no tax shall be imposed by section 4481 on 
the use of any highway motor vehicle by any State or any political 
subdivision of a State.
    ``(b) Exemption for United States.--The Secretary may authorize 
exemption from the tax imposed by section 4481 as to the use by the 
United States of any particular highway motor vehicle, or class of 
highway motor vehicles, if the Secretary determines that the imposition 
of such tax with respect to such use will cause substantial burden or 
expense which can be avoided by granting tax exemption and that full 
benefit of such exemption, if granted, will accrue to the United 
States.
    ``(c) Certain Transit-Type Buses.--Under regulations prescribed by 
the Secretary, no tax shall be imposed by section 4481 on the use of 
any bus which is of the transit type (rather than of the intercity 
type) by a person who, for the last 3 months of the preceding year (or 
for such other period as the Secretary may by regulations prescribe for 
purposes of this subsection), met the 60-percent passenger fare revenue 
test set forth in section 6421(b)(2) (as in effect on the day before 
the day of the enactment of the Energy Tax Act of 1978) as applied to 
the period prescribed for the purposes of this subsection.
    ``(d) Termination of Exemptions.--Subsections (a) and (c) shall not 
apply on and after October 1, 2005.

``SEC. 4484. CROSS REFERENCES.

            ``(1) For penalties and administrative provisions 
        applicable to this subchapter, see subtitle F.
            ``(2) For exemption for uses by Indian tribal governments 
        (or their subdivisions), see section 7871.''
    (b) Administration of Tax.--To the maximum extent possible, the 
Secretary of the Treasury shall administer the tax imposed by section 
4481 of the Internal Revenue Code of 1986 (as added by this section)--
            (1) in cooperation with the States and in coordination with 
        State administrative and reporting mechanisms, and
            (2) through the use of the International Registration Plan 
        and the International Fuel Tax Agreement.

SEC. 5. COOPERATIVE TAX EVASION EFFORTS.

    The Secretary of Transportation is authorized to use funds 
authorized for expenditure under section 143 of title 23, United States 
Code, and administrative funds deducted under 104(a) of such title 23, 
to develop automated data processing tools and other tools or processes 
to reduce evasion of the tax imposed by section 4481 of the Internal 
Revenue Code of 1986 (as added by section 4(a)). These funds may be 
allocated to the Internal Revenue Service, States, or other entities.

SEC. 6. STUDY.

    (a) In General.--The Secretary of Transportation, in consultation 
with the Secretary of the Treasury, shall conduct a study of--
            (1) the tax equity of the various Federal taxes deposited 
        into the Highway Trust Fund,
            (2) any modifications to the tax rates specified in section 
        4481 of the Internal Revenue Code of 1986 (as added by section 
        4(a)) to improve tax equity, and
            (3) the administration and enforcement under subsection (e) 
        of the tax imposed by section 4481 of the Internal Revenue Code 
        of 1986 (as so added).
    (b) Report.--Not later than July 1, 2002, and July 1 of every 
fourth year thereafter, the Secretary of Transportation shall submit to 
the Committee on Ways and Means of the House of Representatives and the 
Committee on Finance of the Senate a report on the study conducted 
under subsection (a) together with--
            (1) recommended tax rate schedules developed under 
        subsection (a)(2), and
            (2) such recommendations as the Secretary may deem 
        advisable to make the administration and enforcement described 
        in subsection (a)(3) more equitable.

SEC. 7. EFFECTIVE DATE AND FLOOR STOCK REFUNDS.

    (a) Effective Date.--The amendments made by this Act shall take 
effect on July 1, 2000.
    (b) Floor Stock Refunds.--
            (1) In general.--If--
                    (A) before July 1, 2000, tax has been imposed under 
                section 4071 or 4081 of the Internal Revenue Code of 
                1986 on any article, and
                    (B) on such date such article 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 subsection 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 article had the taxable event occurred 
        on such date.
            (2) Time for filing claims.--No credit or refund shall be 
        allowed or made under this subsection unless--
                    (A) claim therefore is filed with the Secretary of 
                the Treasury before January 1, 2001, and
                    (B) in any case where an article is held by a 
                dealer (other than the taxpayer) on July 1, 2000--
                            (i) the dealer submits a request for refund 
                        or credit to the taxpayer before October 1, 
                        2000, and
                            (ii) 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.
            (3) Exception for articles held in retail stocks.--No 
        credit or refund shall be allowed under this subsection with 
        respect to any article in retail stocks held at the place where 
        intended to be sold at retail.
            (4) Definitions.--For purposes of this subsection, the 
        terms ``dealer'' and ``held by a dealer'' have the respective 
        meanings given to such terms by section 6412 of such Code; 
        except that the term ``dealer'' includes a producer.
            (5) 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 subsection.
                                 <all>