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Last Updated: Thursday, 9 November 2006, 14:06 GMT
'Replace council tax' says report
First Minister Jack McConnell is said to disapprove of the new plans
Council tax should be replaced with an annual charge based on property value, according to a long-awaited report into local taxation in Scotland.

The "A Fairer Way" report by the independent local government finance review committee said the tax should be based on about 1% of a home's value

The study was headed by former Bank of Scotland chief Sir Peter Burt.

The formula was swiftly rejected by First Minister Jack McConnell and the main parties.

The charge would equate to an annual 1% tax across Scotland if councils wanted to raise the same amount as the council tax.

However, the tax rate would vary between local authorities.

Better off

Even before the report was published, sources close to Mr McConnell said: "There is no way that Labour ministers will support a 1% homes tax."

Launching the study in Edinburgh, Sir Peter denied the findings were already dead in the water.

Under the committee's proposal, he argued, 45% of the population would be better off and 20% would be no worse off.

Let's see what the first minister has to say once there has been mature reflection
Sir Peter Burt

Sir Peter said: "I find it very hard to believe that once people have had a chance to reflect on it, they will not see the merits of what we are proposing."

He added: "Let's see what the first minister has to say once there has been mature reflection."

The proposals would result in an annual bill of about 1,300 or more for the average Scottish house, which now costs more than 130,000.

The report concluded that the council tax system is beyond repair and that a local income tax - which it calculates would be about 6.5% - is not the answer.

The committee took two years to reach its findings, at a cost to the Scottish Executive of 270,000.

'Farcical situation'

Labour ministers still favour a form of property tax but not along these lines and the party has long advocated reforms which would see additional bands added to the present council tax.

The Scottish National Party said the review had turned out to be an "expensive waste of money"

Finance spokesman John Swinney said: "We now have the farcical situation where the first minister has established a two-year commission that has wasted taxpayers' money and reached a conclusion which the first minister has been forced to rubbish before it has even been published."

Mark Ballard MSP, Green finance spokesman, said: "The recommended system would be an improvement on the current one."

Sir Peter Burt defends the property tax proposals

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