German Chancellor Angela Merkel said in a newspaper interview published on Sunday that her government should not consider cuts in taxes before it had presented a balanced budget.
"As long as we are unable to present a balanced budget, in other words no new borrowing, there can be no additional tax cuts," she told German weekly Bild am Sonntag.
The government announced on Friday that the public sector would bring in nearly 180 billion euros ($242.6 billion) more in tax income than initially expected up to the end of 2010 and forecast a balanced budget by 2011 at the latest.
Europe's largest economy grew by 2.7 percent last year, its best rate since 2000, leading to a surge in tax revenues. This year the expansion is expected to remain strong, while the budget deficit shrinks. Economists have said this situation could allow Merkel to push for tax cuts ahead of the next federal election, due in 2009.
In the interview, however, Merkel said her priority remained budget consolidation and disputed that her government had a great deal of fiscal leeway.
"We don't have a surplus to distribute, rather we continue to take on many billions of euros in new debt. The government still owes some 1.5 billion euros. Healthy finances remain the priority," she said.
Conservative Economy Minister Michael Glos called last month for cuts in taxes, saying ordinary people should benefit from the German economic upturn. But he was sharply criticised by fellow cabinet members and government finance advisers.