New German coalition govt. to slash taxes

German Chancellor Angela Merkel says the first step that her coalition government, formed with Free Democrats (FDP), will take is to cut taxes staring from January 1.

"The burden on families has to be lessened, the burden on companies and inheritance tax has to be reformed," Merkel said on Saturday.

The coalition agreement comes after nearly four weeks of talks between Merkel's conservative party and the FDP that won a parliamentary majority in a federal vote.

"The coalition agreement has been reached," said Ronald Pofalla, general secretary of Merkel's Christian Democrats (CDU).

Officials said earlier that the new coalition planned EUR 24 billion (USD 36 billion) worth of tax cuts.

The FDP leader Guido Westerwelle had promised in its election campaign EUR 35 billion (USD 52.5 billion) worth of tax cuts, but Merkel wanted lighter cuts of EUR 15 billion (USD 22.5 billion) in view of the shaky state of Germany's public finances.

The coalition agreement is expected to be approved and signed on Monday.

Merkel announced some new members of her new cabinet, while Westerwelle said he would present the Free Democrats' ministers to his party first and announce them later in the day to the public.

Westerwelle is expected to personally take over the posts of foreign minister and vice chancellor.