(a)
In general— Subpart B of part III of subchapter A of chapter 32 of the Internal Revenue Code of 1986 (relating to special provisions applicable to fuels tax) is amended by adding at the end the following new section:
“4106. Reduction in rates of tax based on increase in State tax rate
“(a) In general—Under regulations prescribed by the Secretary, the rate of tax imposed under section 4081 with respect to any fuel and the rate of tax imposed under section 4041 with respect to any liquid shall be decreased, but not below 2 cents per gallon, by the applicable State tax rate increase with respect to such fuel or liquid.
“(b) Applicable State tax rate increase—For purposes of this section, the term applicable State tax rate increase means, with respect to any fuel or liquid, the excess, as periodically determined under tables prescribed by the Secretary, of—
“(1) the rate of tax imposed by the applicable State on the sale or use of such fuel or liquid, over
“(2) the rate of tax imposed by the applicable State on the sale or use of such fuel or liquid as of the date of the introduction of the STATE Act.
“(c) Applicable State—For purposes of this section, the term applicable State means the State which is determined under regulations prescribed by the Secretary as—
“(1) in the case of a liquid to which section 4041 applies, the State in which such liquid is sold or used, or
“(2) in the case of a fuel to which section 4081 applies, the State in which such fuel is most likely to be sold or used.
“(d) Requirement To maintain interstate highway system—Subsection (a) shall not apply with respect to any fuel or liquid if the applicable State with respect to such fuel or liquid has not entered into an agreement with the Secretary of Transportation under which such State has agreed to provide for the proper maintenance of that portion of the interstate highway system which is within such State.”
(b)
Conforming amendments—
(1)
Section 9503 of such Code is amended by striking subsection (d).
(2)
(A)
Paragraph (4) of section 9503(e) of such Code is amended to read as follows:
“(4) Reduction in rate of transfer based on reduction in State tax rates
“(A) In general—There shall be substituted for each amount in paragraph (2) an amount which bears the same ratio to such amount as the aggregate reduced tax rate bears to the aggregate unreduced tax rate.
“(B) Aggregate reduced tax rate—For purposes of subparagraph (A), the term aggregate reduced tax rate means, with respect to any amount for any calendar year, the amount of tax that the Secretary estimates will be imposed with respect to the liquid or fuel to which such amount relates for such year after application of section 4106.
“(C) Aggregate unreduced tax rate—For purposes of subparagraph (A), the term aggregate unreduced tax rate means, with respect to any amount for any calendar year, the amount of tax that the Secretary estimates would have been imposed with respect to the liquid or fuel to which such amount relates for such year if section 4106 did not apply for such year.”
(B)
Subparagraph (A) of section 9503(e)(2) of such Code is amended by striking “sentence” and inserting “subsection”.
(3)
The table for section for subpart B of part III of subchapter A of chapter 32 of such Code is amended by adding at the end the following new item:
(c)
Effective date— The amendment made by this section shall apply to liquid or fuel removed, entered, sold, or used after the date of the enactment of this Act.