Is VAT all you’ve got?

Grabbing a coffee for 20 cents less doesn’t really sound like the start of an economic recovery but who knows, maybe after this week’s decision to cut value added tax at restaurants and cafes, Greece will soon be measuring out its success with coffee spoons.

Naturally, the government has made the most of the skeptical troika finally giving in on a longstanding Greek demand for VAT in the food service sector to be reduced from 23 to 13 percent. Even so, Prime Minister Antonis Samaras announcing the temporary measure in a televised address was a touch excessive given he only informed the nation that a nightclub drink would soon be about 50 cents cheaper. For the government, though, the symbolism of the reduction is perhaps more important than its economic impact.

Samaras presented it as a personal triumph of persistence. Deputy Prime Minister Evangelos Venizelos said it was a sign that the troika had begun listening to Greece. Indeed, the VAT reduction represents something of a milestone in the Greek bailout program as tax hikes have been the norm and a regular source of much anger over the last three years. It was billed as the first tax cut since the program began, which is not quite accurate. Technically, it was the second as a 15 percent reduction in the emergency property tax introduced in 2011 had been agreed a couple of months earlier. This came after pressure from Democratic Left, which was still part of the coalition at the time. There was no televised address, though.

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From austerity to Ottocracy: Rehhagel’s return

Illustration by Manos Symeonakis

Otto Rehhagel has proved throughout his long career as a soccer player and coach that he has many qualities. Diplomacy was never one of them. “Everyone’s free to say what I want,” he once told journalists. His tendency to gradually assume total control of the German clubs he managed even merited its own term – Ottocracy.

Yet, at the age of 74, Rehhagel is being called on by his homeland to show tact and sensitivity on a mission to Greece, which was his adopted home between 2001 and 2010 when he coached the Greek national team. Bild newspaper provided the rather surprising news on Wednesday that German Chancellor Angela Merkel had chosen Rehhagel to go on a goodwill mission to Athens in a bid to give relations between the two countries a boost and ensure that German tourists give the Greek economy a lift over the summer.

Although Rehhagel will reportedly meet with President Karolos Papoulias and Prime Minister Antonis Samaras during the visit, his assignment appears to be the latest attempt at low-level micro-diplomacy between Germany and Greece.