Republicans agree to extend US payroll tax holiday

Feb 14, 2012, 0:23 GMT

Washington - Republican leaders in the US House of Representatives said Monday that they would support an extension through the end of 2012 of a cut in the payroll tax that is levied against US workers to pay for pensions.

A statement from House Speaker John Boehner and others said that the conservative party's majority in the lower chamber would no longer insist that the extension be offset by spending cuts.

Republicans in Congress have made deficit-cutting one of their highest priorities since capturing the House in the 2010 midterm elections.

The 2-percentage-point cut in the payroll tax, paid by nearly all US workers, averages 80 dollars a month for 160 million people. It was launched as part of the 2009 stimulus package signed by President Barack Obama during the deepest US recession in nearly 80 years.

'Because the president and Senate Democratic leaders have not allowed their conferees to support a responsible bipartisan agreement, today House Republicans will introduce a backup plan that would simply extend the payroll tax holiday for the remainder of the year while the conference negotiations continue,' the Republican leadership statement said.

Due to expire at the end of 2011, Congress passed a two-month extension in December. The cost of an additional 10-month extension starting in March is estimated at 100 billion dollars.

Legislators said that the measure could be passed this week.