German Chancellor Gerhard Schroeder played down concerns about Germany's budget deficit yesterday, saying his plans to slash income tax next year will help the country fulfill its "leading responsibility" to boost the European economy.

　　A confident Schroeder spoke during a visit by the European Union's top finance official, Pedro Solbes, who raised questions about how the German government would finance its tax cut and stay within EU fiscal rules meant to protect the euro.

　　Schroeder said the tax cut would complement his efforts to trim the German welfare state and ease rigid labor laws.

　　"Since we are carrying out structural reforms and will continue with them, it is responsible for us to act as we have to support positive prospects for the economy," Schroeder said, addressing Solbes during a speech to a conference organized by his Social Democratic Party.

　　"We are convinced that this is the right concept for the current situation," he said. "We have a leading responsibility for growth in Europe."

　　Schroeder also suggested that the European Central Bank could do more to boost growth in the 12 countries using the euro. The bank, whose governing council meets next week, cut its key interest rate last month to a postwar low of 2 percent.

　　Schroeder on Sunday announced plans to move up by a year a tax cut originally planned for 2005, adding to 7 billion euros (US.1 billion) in relief already slated for January 1, 2004. The move would send a "signal of revival" for Europe's largest economy, he said.

　　Schroeder initially put the additional tax relief at 18 billion euros, but German Finance Minister Hans Eichel revised that down to 15.5 billion euros on Monday.

　　The tax plans, which could face obstacles in parliament's opposition-controlled upper house, came on the heels of a draft 2004 budget that would run up more new debt than originally planned.

　　That increased doubts over whether Germany, whose 2003 budget deficit is set to exceed an EU-imposed limit of 3 percent of gross domestic product for the second consecutive year, will hit the target next year.

　　Solbes, the EU's economic and monetary affairs commissioner, was reassured by Eichel on Monday that Germany is committed to respecting the rules next year, but he said that "risks remain."

　　Solbes said a key point would be how the proposed tax cuts are financed. Schroeder has said privatizing state assets and reducing subsidies would offset some of the shortfall in revenues.

　　Eichel conceded that Germany needs to fulfill government forecasts of 0.75 percent economic growth this year and 2 percent next year - widely viewed as too optimistic - to respect the deficit limit.