THE Government has broken its promise to give the bulk of the property tax revenue back directly to the areas where it was collected.
And it has also emerged that city homeowners will be subsidising householders in rural areas.
The Coalition had guaranteed that €4 out of every €5 of the property tax would be spent in the council areas where it was paid, with the remaining €1 going into a general pot for councils.
But instead, all the funds are going into a central fund to be given out to all local authorities and to pay for Irish Water, the new state agency taking over the running of water services across the country.
The move also means city homeowners will be subsidising householders in rural areas, while councils where there is a lower property tax collection rate will not lose out.
The U-turn means local authorities covering larger populations, who expected to increase their revenue stream through the property tax, won't be getting a dividend.
Funding to councils will continue on the present discretionary basis, rather than being linked directly to the amount of property tax raised in that area.
The State will be getting €500m in property tax revenue in 2014. This year, €250m will be collected because householders are paying for a half year rather than a full year.
The Revenue Commissiioners are already sending letters outlining the payment options for next year.
The broken promise means that the biggest losers are the four councils in Dublin, which had been expected to get a combined funding boost of €170m from the property tax revenue.
Labour Dublin South-East TD Kevin Humphreys, who highlighted the issue in the Dail, said it was a "cash grab" against Dublin. He said that people in the capital were paying the lion's share of property tax but would not be getting the full benefits.
"The money that should be going to the local authorities in Dublin will now be used to subsidise the rest of Ireland.
"This is just another penal tax on Dublin," he said.
So far, €100m of the €241m declared in property tax has come from the four councils in Dublin. In comparison, just €1m has been collected in Leitrim, which has the smallest population in the country. People in Carlow have paid €1.6m while the total in Cavan is €2.2m.
Until now, the Government had been insisting that councils would get to keep 80pc of property tax revenues raised in their areas for direct local services next year.
Environment Minister Phil Hogan announced this officially last March. He said that it would allow councils to fund new services such as local enterprise offices and other measures "that will help create jobs".
But his department confirmed the policy had now changed, saying the establishment of Irish Water created "significant organisational and financial challenges". It also said there was a need to help poorer councils.
"This approach allows maximum flexibility in allocating Local Property Tax in 2014 with the priority to support those local authorities with weaker funding bases," it said.
There is no definite commitment to allow local authorities to keep 80pc of the property tax funding collected in their area in 2015. The department will only say that it will make a "proportion of the proceeds available as a source of local funding" to councils.