The leaders of Germany’s ruling coalition parties are meeting on Wednesday for what could be decisive talks on their reform package, with decisions on tax relief for low and middle incomes, labour market reforms, pensions, health care and long-term care all on the agenda.

Whether decisions will be reached on Wednesday is unclear. Negotiations could also run into the night, with the coalition determined not to let itself be pressured by deadlines.

A commission has already put forward proposals on pension reform that the conservative bloc – made up of Chancellor Friedrich Merz’s Christian Democratic Union (CDU) and its Bavarian sister party the Christian Social Union (CSU) – and the centre-left Social Democrats (SPD) want to implement as closely as possible.

Both sides are expected to agree on a roadmap for this by the end of the year.

Income tax biggest sticking point

The savings programme for the statutory health insurance scheme is already going through parliament, though some issues still need to be resolved.

The reform of income tax is seen as the biggest sticking point, with Finance Minister Lars Klingbeil having put forward two proposals.

The reform package is regarded as the central domestic policy project of the CDU/CSU-SPD coalition. The aim is to revive the economy and make the social security systems fit for the future.

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