BERLIN - German Chancellor Angela Merkel looks on track to win a second term and has a good chance of forming the center-right coalition that eluded her four years ago, the last polls released before Sunday's election indicated.

A survey by Forsa for Stern magazine, probably the last to be published before the vote, gave Merkel's conservatives a nine-point lead over their main rivals, the center-left Social Democrats (SPD), virtually ensuring she will win a new four-year term.

It also mirrored most of the other polls released over the past few days in giving Merkel's conservatives and their preferred coalition partners, the business-friendly Free Democrats (FDP), a narrow parliamentary majority.

A center-right government would look for opportunities to cut income, corporate and inheritance taxes, probably starting in 2011.

It could also extend the life of nuclear plants that are scheduled to be phased out over the next decade, and take a more critical view of Turkey's bid to join the European Union.

Polls suggest the center-right majority is wafer-thin, with the conservatives on 35 percent, the FDP on 13, the SPD on 26, the Greens on 11 and the Left party on 10.

But political scientists say Merkel's party, the Christian Democrats (CDU), stand a good chance of winning extra seats in parliament due to a quirk in the German election system.

These so-called overhang seats could put the center-right over the top even if their support dips by a few percentage points when voters in Europe's largest economy cast their ballots this weekend.

It's going to be another close race, said Forsa head Manfred Guellner. But if one takes the overhang seats into account, the conservatives and FDP may well be able to get a majority.

ECONOMISTS FEAR TAX HIKES

The most likely alternative if Merkel fails to get a center-right majority is another grand coalition with the SPD, the awkward partnership of traditional rivals that she has presided over since 2005.

A new right-left government would likely focus on reducing Germany's budget deficit, which could rise to double European Union limits next year.

Economists and fund managers polled by Reuters this week expressed concern that budget consolidation could be pursued via tax hikes rather than spending cuts under a grand coalition.

In 2007, Merkel's government introduced the biggest tax rise in post-war German history by pushing up value-added tax to 19 from 16 percent.

Her hopes of avoiding a grand coalition could hinge on her CDU winning what pollsters estimate could be up to 20 additional overhang seats in parliament.

These seats result because each voter in Germany casts two ballots -- one directly for a candidate in his or her constituency and the second for a party.
If a party wins more direct seats than it would theoretically get according to the percentage of second votes, the Bundestag, the lower house, creates extra seats.

Germany's Constitutional Court has ordered this quirk be eliminated by 2011 because it disadvantages smaller parties, but Merkel's party resisted rule changes before the election.

As a result, there could be an uproar from other parties if her majority does end up depending on overhang seats.

Power that depends on overhang seats would be problematic, said Karl-Rudolf Korte, a political scientist at Duisburg-Essen University.

Germany