In a close 219-209 vote, the house approved legislation yesterday that directs Congress to enact a new tax system by July 4, 2000 and end the current tax code by December 31, 2002.

To become law, the senate must also pass the bill and the president sign it. Similar legislation has been introduced in the senate but no action has been taken on it.

The white House and most Democrats opposed the bill saying it would create uncertainty that could hamper businesses and families from making long-term decisions. Fifteen house Democrats voted in favour of the bill, while 20 republicans voted against it. In what may become a tactic for the election, Republicans painted those who opposed the legislation as defenders of the status quo. "What the President should recognise is that the American people are tired of thousands ofpages of regulations, of audits they don't understand by agents they can't talk with from a bureaucracy they can't control," house speaker Newt Gingrich, a Georgia Republican, said.

President Bill Clinton said the plan was "superficially appealing since there is something about the tax code that everybody dislikes," but that it would be a mistake to approve abolishing it without an alternative in place.

"You shouldn't get rid of what you have until you know what you're going to replace it with," Clinton said.

Republicans have not yet arrived at a consensus among themselves over what type of new tax system should be enacted, but two main proposals have emerged -- a flat tax and a national sales tax -- to replace the current income tax. "To be able to vote on a pig in a poke -- that is, vote to abolish something without any notion of what it is that we will be replacing it with -- in my view, is just astounding," Senate Democratic leader Tom Daschle of South Dakota said earlier.

He added there was "nota chance of it coming up in the Senate" and being passed.

A spokeswoman for Senate majority leader Trent Lott said the Mississippi Republican was "looking for an opportunity to have a vote on the issue, possibly as early as July." Treasury department officials this week blasted the legislation saying it would create uncertainty that could hurt the economy.