TOKYO. Dec 11: Japan is preparing to cut income taxes by seven trillion yen (65 billion dollar) as part of an economic stimulus package now expected to be unveiled next week, a local news report said yesterday, reports AFP.

Tokyo Broadcasting System Inc (TBS) said in its main evening news bulletin that the government planned to fund the income tax, six per cent.

The government of prime Minister Morihiro Hosokawa has been struggling to come up with a compromise on how to finance a reduction in income taxes, seen as an urgent requirement to boost depressed consumer spending.

The Social Democratic Party, the biggest^ party in the coali-

tion. strongly opposed the consumption tax Introduced in 1989 and is also cool to any further Increase. But the Japan Renewal Party, the other main force behind the coalition, adheres to the Finance Ministry line in opposing deficit financing.

Chief Cabinet Secretary Masayoshi Takemura reiterated Thursday that the package, initially expected this week, would now be announced after the government's supplementary budget clears the Upper House, probably next week.

"Tfre Prime Minister along with concerned officials have al ready prepared for it, ne told a lecture meeting in Tokyo. "We would like to announce it soon after the passage of the supplementary budget."