WASHINGTON, Oct 13: The House Ways and Means Committee on Friday approved a Republican-backed economic stimulus plan designed to inject $100 billion into the U.S. economy over the next year with tax breaks for businesses and payroll tax rebates.

The tax-writing panel voted 23-14 along party lines to send the package to the House of Representatives for a vote as early as next week.

A key feature of the plan is a rebate for wage-earners who did not earn enough money to benefit from the income tax rebates issued in the last few months as part of the $1.35 trillion 10-year tax cut signed by US President George W. Bush earlier this year.

The checks — up to $300 for individuals, $500 for single heads of households and $600 for married couples — are to go to taxpayers before the end of the year.

Committee Chairman Rep. Bill Thomas, a California Republican, said the package would provide immediate help to the US economy that economists fear slipped into recession following the Sept. 11, attacks. He said it would give the economy a $100 billion boost in the next year, but cost the US Treasury only $160 billion over 10 years.

The bill would reduce federal revenues by nearly $100 billion in 2002, much more than the $60 billion to $75 billion plan suggested by Bush.

Democrats criticized the plan, saying it was too skewed toward tax breaks for businesses and broke Bush’s promise to work with Democrats to craft a bipartisan stimulus package.

Democrats back payroll tax rebates for low-wage earners but they also want more spending to expand unemployment benefits and help for those who lost jobs to keep health insurance coverage. They also want money to beef up security around the country.

White House spokesman Ari Fleischer said the bill included many items the president sought and some he did not. The president would work to craft a bipartisan plan, he said.

The president urges the House to take action and he hopes that the end product will be a very bipartisan product, Fleischer said. He wants to work closely with the Democrats on this.

Companies would also be able to use net operating losses over the next three years to reduce tax payments over the previous five years.

The proposal also simplifies rules on capital gains, which means lower rates on some gains from the sale of stocks and other assets.

It accelerates scheduled income tax reductions that were part of Bush’s tax cut package. Under the earlier bill, the 28 per cent tax rate dropped to 27 per cent and was gradually to fall to 25 per cent in 2006. The Ways and Means bill calls for the 25 per cent rate to take effect in January.

The proposal would also use an existing block grant programme to help states pay for rising unemployment costs and offer health insurance aid for those who lose jobs.

Lawmakers had hoped to put together a bipartisan stimulus package and tax writers in both the House and Senate had several meetings to try to achieve that goal.—Reuters