Mumbai: The finance committee of the US Senate today approved a $157 billion stimulus plan for the economy that offers extended tax rebates and tax cuts to businesses.

The package, a modified version of the package moved by President George Bush early this month, proposees a flat $500 tax rebate to individuals and $1,000 for couples, plus $300 per child.

Rebates would also be offered to 20 million low-income senior citizens who are on social security doles and are not covered by the $146 billion stimulus bill approved by the House earlier this week. (See:Bush proposes relief to business, consumers in a $150 billion stimulus) plan)

The finance committee voted 14-7 for the plan and the senate was expected to take up stimulus legislation quickly.

The House package calls for rebates of up to $600 for individuals and $1,200 for married couples against the finance committee bill that proposes $500 and $1,000 in tax rebates to all eligible people.

The House bill proposes exclusion of individuals with more than $75,000 in taxable income and married couples with more than $150,000 while the finance committee bill doubles the eligibility limit to $150,000 and $300,000, respectively, for individuals and married couples.

The senate package also includes tax breaks for a number of renewable energy resources while the finance committee bill proposes unemployment benefits beyond the 26 weeks offered by most states. 

The finance committee bill is estimated to cost the treasury about $157 billion this year and nearly $36 billion next year.

US economic growth nearly stalled in the fourth quarter with a growth rate of just 0.6 per cent, capping its worst year since 2002.

A commerce department report released yesterday showed that the economy deteriorated considerably during the October-December quarter amidst worsening problems in the housing and credit market. Fears of a recession have grown, even as inflation remained high.

For the whole of 2007, the economy grew by just 2.2 per cent, the weakest performance in five years, when the country was struggling to recover from the 2001 recession.