BONN, JAN. 7 -- The West German government, under pressure from the United States and other trading partners to lower taxes in 1989 to stimulate economic growth, today decided instead to raise some taxes next year to trim a widening budget deficit.
Finance Minister Gerhard Stoltenberg announced after a Cabinet meeting that the government would increase some consumer taxes, cut subsidies and restrict spending next year to achieve a minimum reduction in the deficit of 10 billion marks, or $6 billion at current exchange rates. The planned reduction in 1989 would be a quarter of the expected deficit of $24 billion in 1988.
Speaking at a news conference, Stoltenberg reaffirmed that West Germany will permit the federal budget deficit to expand sharply during 1988 as pledged in a seven-nation economic accord last month. A widening deficit tends to promote economic growth, at least temporarily, by adding to total demand for goods and services in the economy.
The government's decision was likely to further irritate the United States and West Germany's other major trading partners. They have been urging Bonn to adopt more expansionary economic measures to help raise West Germany's sluggish growth rate.
The United States has been particularly emphatic in urging West Germany to bring forward to 1989, or even earlier, some tax cuts that now are scheduled to take effect in 1990.
A U.S. official here reaffirmed tonight that Washington would like Bonn to "accelerate" its tax cuts and loosen government economic controls.
"We want to see more growth in the West German economy," the U.S. official, who spoke to reporters on condition that he remain unidentified, said.
But Stoltenberg said he wanted to end all discussion of early enactment of tax cuts. "We have no room for additional tax relief," Stoltenberg said.
Chancellor Helmut Kohl's center-right coalition took today's action after coming under criticism from the left-of-center Social Democratic Party. The opposition accused the government of failing in its policy of seeking to rein in the budget deficit.
Social Democrat Hans Apel, a former finance minister, called for Stoltenberg's resignation.
Within the coalition, Economics Minister Martin Bangemann has urged the government to leave open the possibility of early enactment of tax cuts if necessary to avert a recession, according to government sources. Bangemann is chairman of the small Free Democratic Party, which is a junior partner in the coalition.
So far, Stoltenberg, of the dominant Christian Democratic Union, has succeeded in persuading the coalition to reject Bangemann's advice, at least publicly, and place top priority on minimizing budget deficits.
But many West German and foreign analysts believe that Stoltenberg would agree to cut taxes earlier than planned if the economy begins to contract. The government forecasts 1988 growth of between 1.5 percent and 2 percent.
The mass-circulation newspaper Bild reported today that the government had a "secret plan" to advance implementation of part of the 1990 tax cut package.
Stoltenberg blamed the widening of this year's deficit on two factors beyond government control: a sharp drop in the profit from the central bank due to the fall in value of its U.S. dollar reserves, and increased payments to the European Community.
The combined effect was to raise the expected 1988 budget deficit by 35 percent from its original target of $18 billion, Stoltenberg said.
The government agreed not to raise taxes or take other steps during 1988 to cover the widened shortfall because of "the expectations of the public and of our international partners," Stoltenberg said.
But the government must agree before the summer vacation break on measures to trim the 1989 deficit, he said.