**Germany’s new coalition allies have announced major tax cuts after talks between Chancellor Angela Merkel’s conservative CDU party and the FDP.**The deal paves the way for the coalition to take office next week.
Income taxes will be slashed by 24bn euros ($36bn, £22bn) from 2011-2013, said Horst Seehofer, who heads the CDU’s Bavarian sister party.
Balancing tax relief with cutting the deficit was the main issue for the CDU and the pro-business Free Democrats.
Mrs Merkel and FDP leader Guido Westerwelle are due to brief reporters later.