In a party line vote, the US Senate late yesterday passed a $350-billion tax cut that would temporarily eliminate taxes on stock dividends - the central tenet of a White House economic stimulus plan.

The tax cuts, passed by a Senate vote of 51 to 49, would be spread over the next decade.

US President George W Bush had originally sought $726-billion in tax cuts - more than twice what the Senate ultimately approved.

Still, the vote ensures a massive tax cut for the White House just as the president begins revving up his 2004 presidential re-election campaign.

Three Democrats, Senators Ben Nelson of Nebraska, Evan Bayh of Indiana and Zell Miller of Georgia, voted with the Republican majority in supporting the tax cuts, offsetting the three Republicans - John McCain of Arizona, Olympia Snowe of Maine and Lincoln Chafee of Rhode Island - who opposed the bill.

Earlier in the evening, the Senate approved a key element of the White House economic stimulus plan, approving by a vote of 51 to 50 an amendment to suspend for three years the double taxation on stock dividends, with US Vice President Dick Cheney casting the tie-breaking vote.

The stock dividend taxes would be suspended in 2004, 2005 and 2006 and would be restored in 2007. Bush had originally sought complete elimination of the double taxation on dividends.

In a statement issued shortly after midnight, Bush commended the Senate for passing the Jobs and Growth package.

"By including a measure to completely abolish the double taxation of dividends, the Senate has demonstrated that they are committed to creating as many jobs as possible for US workers," Bush said.

The lower chamber of the US legislature, the House of Representatives, last week adopted a $550-billion tax cut, rejecting Bush's proposal to eliminate dividend taxes.

The $200-billion difference between the two tax cut bills must now be hammered out in conference, when the negotiators for House and Senate will decided upon a definitive tax cut figure.

"Jobs are on the line and ... I call on Congress to resolve their differences quickly so that I can sign a bill that will help create jobs, boost take-home pay and spur economic growth," Bush said in his statement. – Sapa-AFP.