A group of backbench Dublin Government TDs last night warned Ministers they would become “rebellious” if central funding for local authorities is diverted from councils in the capital towards rural areas.

Four Labour TDs for Dublin – Kevin Humphreys, Robert Dowds, Aodhán Ó Ríordáin and Brendan Ryan – tabled a Dáil motion on the issue, and said councils in urban areas must not be "ripped off".

Mr Humphreys also said home values in Dublin were increasing, which would lead to higher rates of local property tax (LPT).

Central government grants to Dublin councils for housing and other areas face being cut and redirected elsewhere in the State because of the higher property tax return in the capital.

The Government has committed to allowing 80 per cent of the tax stay within the local authority area in which it is collected, but senior Coalition sources say this will lead to a “windfall” for the four Dublin councils.

Talks are ongoing between Government departments on how to make sure rural councils are not left worse off under a so-called equalisation of funding.

Discussions

Responding to the motion from the Labour TDs, Fergus O’Dowd, Minister of State for the Environment, said the discussions were focused “on implications of local retention and variation of local property tax”.

Councils are allowed to vary the rate of LPT by 15 per cent, and have until September to set the rates for 2015.

“There is a need to recognise that the LPT base outside of the cities and main commuter zones is narrower and that there will be a requirement to equalise the income position of those local authorities in order to ensure that an acceptable standard of service delivery is maintained across the country,” said Mr O’Dowd.

Central grants

He said central grants would be considered as part of the estimates process ahead of the budget later this year.

However, the TDs told Mr O’Dowd they would be watching carefully to ensure that Dublin does not lose out on its share of funding.

“The Minister of State indicated this is a complex issue but I will put it in simple terms,” Mr Humphreys said. “Do not try to rip off Dublin.”

Mr Dowds, a TD for Dublin Mid West, said: “We will be in a very rebellious state if we do not make progress on this issue.”

Mr Ryan claimed “any reduction in central funding would equate to Dubliners being punished for paying property tax”.

Mr Ó Ríordáin said “the suggestion that central government grants to Dublin City Council or any of the other Dublin councils could be affected because of receipts from the local property tax is patently unfair”.