Chances of a coalition government led by Angela Merkel increases in Germany

While Merkel’s conservative party has come to an understanding with the SPD on tax related matters. The lack of a government in Germany, despite an election in September 2017, has weighed on Europe’s largest economy.

On Monday, a source disclosed that German Chancellor Angela Merkel’s conservative party has come to an agreement with the centre-left Social Democrats (SPD) party with the two agreeing to provide tax relief to those falling in high income brackets.

The agreement signals much needed progress for forming a coalition government.

Incidentally, the tax relief was an election promise made by Merkel’s conservative party and this agreement that raises the bar for top income tax rates for high earners to an annual income of 60,000 euros signals that the SPD is willing to compromise.

A deal with the SPD will mean that Merkel, will continue to govern Germany with a historic fourth term.

Despite being a minor step, the compromise on taxation between the two would-be partners, marks a significant progress since the two parties can now focus on bridging other differences including the future of the EU, its economy and the vexed issue of immigration.

“Yesterday, we worked very factually and we did well,” said Julia Kloeckner, a senior member of the CDU. “We are aware of the fiscal limitations and we are optimistic.”

As far as the SPD is concerned, it wants to improve the rights of workers in the country as well as scrap Germany’s dual healthcare system of premium private care and a more accessible public healthcare with a single one – “citizen’s insurance”.

The SPD is also opposed to extending a ban, that expires in March, on family reunifications for asylum seekers.

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