The scheme, proposed in a government-commissioned report from the Chartered Institute of Public Finance and Accountancy* would allow authorities to set local income tax at five different rates between 2p and 4p in the pound - supplementing the current property tax - but the national income tax take would be reduced by about 3p in the pound.
The government will bring out its findings from the balance of funding
review in July, deputy prime minister John Prescott told BBC Radio Four's
Today programme this morning.
Mr Prescott accused the Conservatives of wanting to bring back the poll tax.
But Tory local government spokesperson Caroline Spelman, interviewed
separately on the programme, denied this. She said the problem of the unfair
burden of council tax on people living alone in large houses needed to be
Mr Prescott suggested this meant 'she wants to look at some of the
principles involved in the poll tax' and that the Conservatives were
ignoring council tax benefit.
He also pointed out some of the practical problems with the Liberal
Democrats' policy of local income tax. 'It's easy to talk of reform, it's
much more difficult to achieve it,' he said.
The government's own views will be known when the balance of funding review
is completed, he said. 'It will come out in July, it will look at the
options to be considered.'
Commenting on the Chartered Institute of Public Finance and Accountancy's
report on local income tax, Edward Davey MP, Liberal Democrat Local
Government spokesman, said:
'CIPFA's latest research on local income tax once again confirms this as a
viable, fair and practical alternative to council tax.
'On this issue, the local elections will give the public a chance to send a
clear message to the government.
'While CIPFA hasn't adopted the Liberal Democrat model of local income tax,
this is still a major step forward for our campaign.'
* The report is available here.