Minister for the Environment Alan Kelly was overruled by Minister for Finance Michael Noonan, and also faced objections from his Labour colleagues, on property tax proposals he brought to Cabinet this week.

Coalition sources said Mr Kelly, deputy leader of the Labour Party, first brought a memo on property tax to the weekly pre-Cabinet meeting of Labour Ministers on Wednesday morning.

However, it contained some "differences of approach" from what other Ministers, particularly Minister for Public Expenditure and Reform Brendan Howlin, had been expecting. It is understood the differences centred on the technicalities of how the surplus tax collected by wealthier county councils would be redistributed to less well-off local authorities.

Agreement

Broad agreement between the two parties about how to proceed with the administration of the tax was achieved in the negotiations between Taoiseach Enda Kenny and Tánaiste Joan Burton following her election as Labour leader. The approach was outlined in the Government’s restatement of aims

after the Cabinet reshuffle earlier in the summer, with the Coalition promising no council would be left worse off than last year.

“There had been agreement but there was some ironing out to be done on the finer details,” a Coalition source said. “But [Mr Kelly] went off and did it his way.” One source said Mr Kelly’s approach would have given central government fewer savings and would have left Dublin “marginally better off”.

Mr Kelly’s spokesman said “a number of permutations were considered and Government decided on the fairest and most balanced approach to all local authorities and one that facilitates a reduction of Local Property Tax across 12 local authorities where the most property tax is paid”.