Dublin still third most expensive EU capital

"DEAR old Dublin", living up to its costly reputation, is named in a new report as the third most expensive capital city in the EU.

And things could soon get worse as the cost of housing in the capital may rise further as the four local authorities in the Dublin area consider the radical proposal of introducing a €10,000 levy on new houses.

Only London and Copenhagen are more expensive, according to a new worldwide cost of living survey for 2003.

The report, compiled by Mercer HR Consulting, also ranks Dublin as 21st most expensive in a study of 144 cities which measured the cost of more than 200 items in each location including housing, food, clothing and household goods, as well as transport and entertainment.

Overall, Tokyo and Moscow are the world's most expensive cities, while the Paraguayan capital, Asuncion, is the cheapest.

Based on a survey which used New York as a base point with an index of 100, Tokyo scored 126.1 - almost three and a half times more expensive than Asuncion's 36.5. Dublin recorded a score of 86.0.

Compared to 2002, the gap between the world's dearest and least expensive cities has narrowed, although Dublin retained last year's ranking as the third most expensive EU capital, even with the cost of housing removed from the index.

Meanwhile, it has emerged that local authorities are considering introducing a 10,000 levy on all new homes which would push up the price of an average house by at least 4%.

Dublin's local authorities are looking at ways of funding infrastructure and a tax on each new home is one of the possibilities being explored.

Any attempt to hike up the cost of new homes is likely to be strongly resisted at a time when house prices rose 13% last year.

Dublin City manager, John Fitzgerald, confirmed yesterday that the council was looking at introducing such a levy.

The findings of the Mercer report, however, will come as no surprise to Dubliners as they, like the rest of the country, have experienced soaring increases in the price of many basic goods and services in the last few years.

Although, inflation dropped dramatically last month to 3.7%, the cost of living in Ireland is still more than twice the EU average.

The latest study also supports the conclusions of a recent Forfás report which claimed that Ireland is set to overtake Finland later this year as the most expensive country in the eurozone.

The report blamed taxes introduced by the Government in last year's budget for playing a major role in the high rate of inflation.