PHASEOUT OF 4.3-CENT MOTOR FUEL EXCISE TAXES ON RAILROADS AND INLAND WATERWAY TRANSPORTATION WHICH REMAIN IN GENERAL FUND.

SEC. 241. PHASEOUT OF 4.3-CENT MOTOR FUEL EXCISE TAXES ON RAILROADS AND INLAND WATERWAY TRANSPORTATION WHICH REMAIN IN GENERAL FUND.(a) Taxes on Trains.—(1) In general.—Clause (ii) of section 4041(a)(1)(C) is amended by striking subclauses (I), (II), and (III) and inserting the following new subclauses:“(I) 3.3 cents per gallon after December 31, 2004, and before July 1, 2005, “(II) 2.3 cents per gallon after June 30, 2005, and before January 1, 2007, and“(III) 0 after December 31, 2006.”.(2) Conforming amendments.—(A) Subsection (d) of section 4041 is amended by redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following new paragraph:“(3) Diesel fuel used in trains.—In the case of any sale for use or use after December 31, 2006, there is hereby 118 STAT. 1438 imposed a tax of 0.1 cent per gallon on any liquid other than gasoline (as defined in section 4083)—“(A) sold by any person to an owner, lessee, or other operator of a diesel-powered train for use as a fuel in such train, or“(B) used by any person as a fuel in a diesel-powered train unless there was a taxable sale of such fuel under subparagraph (A).No tax shall be imposed by this paragraph on the sale or use of any liquid if tax was imposed on such liquid under section 4081.”. (B) Subsection (f) of section 4082 is amended by striking “section 4041(a)(1)” and inserting “subsections (a)(1) and (d)(3) of section 4041”.(C) Subparagraph (B) of section 6421(f)(3) is amended to read as follows:“(B) so much of the rate specified in section 4081(a)(2)(A) as does not exceed the rate applicable under section 4041(a)(1)(C)(ii).”.(D) Subparagraph (B) of section 6427(l)(3) is amended to read as follows:“(B) so much of the rate specified in section 4081(a)(2)(A) as does not exceed the rate applicable under section 4041(a)(1)(C)(ii).”.(b) Fuel Used on Inland Waterways.—Subparagraph (C) of section 4042(b)(2) is amended to read as follows:“(C) The deficit reduction rate is—“(i) 3.3 cents per gallon after December 31, 2004, and before July 1, 2005, “(ii) 2.3 cents per gallon after June 30, 2005, and before January 1, 2007, and“(iii) 0 after December 31, 2006.”.(c) Effective Date.—The amendments made by this section shall take effect on January 1, 2005.