Budget deficits may force the United States to raise taxes, Presidential adviser Paul Volcker, a former Federal Reserve chairman, said.

The Hill newspaper reported on Wednesday that according to Volcker a value-added tax used frequently in Europe -- essentially, a sales tax -- "was not as toxic an idea" as it was in previous years.

A tax on carbon or energy use might be required to lower the deficit, he further said.

He said in remarks at the New York Historical Society, Bottom line: "If at the end of the day we need to raise taxes, we should raise taxes."

"The president is not proposing to cut the deficit at the expense of middle-class families," a White House official responded. (With Inputs from Agencies)