BERLIN (Reuters) - German Chancellor Angela Merkel’s conservatives hope to draw the Social Democrats (SPD) into coalition with offers on healthcare and employment, one of her ministers said, but the two camps remain far apart on tax issues.

FILE PHOTO: Acting German Chancellor Angela Merkel leaves after a news conference at the Christian Democratic Union (CDU) party headquarters in Berlin, Germany, December 18, 2017. REUTERS/Hannibal Hanschke/File Photo

Merkel’s CDU/CSU alliance won a national election in September, but she has so far failed to agree terms with other parties on a coalition that would enable her to serve a fourth term.

Her best chance now appears to be a reboot of the “grand coalition” with the centre-left SPD that ran Germany from 2013 to 2017 and continues to govern in a caretaker capacity.

Peter Altmaier, acting finance minister and Merkel’s chancellery chief, told newspaper Sueddeutsche Zeitung he thought such an alliance was again possible.

The SPD had previously said it intended to go into opposition after suffering its worst election result in more than eight decades.

But Germany’s two biggest political groups are now set to start exploratory coalition talks next month and hope to decide by Jan. 12 whether to open full-blown negotiations.

Asked what offers the conservatives would make, Altmaier said: “We’ll of course talk with the SPD about problems in hospitals and nursing care, improvements for families and children, broadband expansion, qualification for new jobs and how we can reach full employment.”

There is overlap with the SPD on these areas, he said, adding that helping Germany’s 900,000 long-term unemployed needed to be a key project - an idea likely to go down well with the SPD.

NO RED LINES, BUT...

Taxation could be a sticking point, however.

Senior SPD member Andrea Nahles told German magazine Der Spiegel her party wanted to press for a higher top rate of tax for individuals and non-listed companies and ensure the wealthy paid more.

The conservatives have rejected the idea of higher taxes for the rich.

Altmaier said that while the conservatives would not draw any red lines ahead of the talks, they wanted a coalition treaty to include a pledge not to raise taxes or increase debt.

The SPD also wants to scrap Germany’s dual healthcare system of premium private care and more widely accessible public care to replace it with a single “citizen’s insurance”. The conservatives fear that would harm competition.

Nahles said employers and employees needed to pay the same amount towards public healthcare and doctors’ fees for public and private healthcare systems should be reviewed.

While the conservatives have made clear they are keen on another “grand coalition”, the SPD has kept the option of tolerating a minority Merkel-led government on the table. The chancellor rejects that idea.

Senior SPD member and Foreign Minister Sigmar Gabriel told the Funke newspaper consortium that some of his party colleagues were ready to live with a minority government.

But he said he worried about the implications for Europe’s stability.

“I’m rather skeptical,” he said in an interview published on Friday as political crisis gripped Spain, where separatists were set to regain power in Catalonia following regional elections.

“A shaky government in Germany would probably lead to an earthquake in Europe - but we need to talk about it.”