TOKYO. Feb 1: Japanese government leaders agreed Monday to income tax cuts, aimed at boosting the economy. and a consumption tax hike to pay for It. officials said, reports AFP.

The accord was reached at a meeting attended by Finance Minister Hirohisa Fujii. Foreign Minister Tsutomu Hata and six other cabinet members. the officials said.

The ministers agreed that the current three per cent consumption tax on all goods and services should be Increased to make up for the planned income tax reduction and the measures should be Included in the same package, they said.

Prime Minister Morihiro Hosokawa's administration plans to finalise by Wednesday measures to pay for income tax cut. officials said

Hosokawa gave his basic consent to the policy, approved at the meeting between the eight cabinet members Motley, they said.

Chief Cabinet Secretary Masayoshi Takemura said Sunday that the government would delay a proposed Increase In the consumption tax Included In an economic stimulus package to be announced Thursday.

Fujii told a news conference. Monday that the income tax cut and consumption tax hike would be included in the same package.

Hosokawa, fresh from his weekend victory In securing the passage of political reform legislation, was reported to have distanced himself from Takemura's remarks.

The economic-stimulus package, initially expected to be announced in December but

delayed by problems In passing the political reform legislation, is expected to be as high aa 16 trillion yen (145 billion dollars). including tax cuts of up to seven trillion yen

Fujii confirmed that the government would adopt recommendations fpr tax system reform on February 8 and draw up its policy guide-lines for this year s budget on February 9 before Hosokawa leaves for Washington

On February 10. the fi-nanee ministry will propose a draft of budget for the new fiscal year starting in April, as well as a, third supplementary budget for the current year ending in March. Fujii said.

The supplementary budget will be submitted to parliament on February 15 by which time the budget for the new year will be finalised, he said.