THE council tax freeze “cannot go on”, according to the body set up to find alternatives to the charge – and there are three options on the table for replacing it.

After ten months and 4,500 responses from the public, the Commission on Local Tax Reform yesterday unveiled three options for replacing the “discredited” system.

Established in 1993, the tax is said to have failed Scotland because “some people are paying more than they should” despite previous attempts at reform.

Local authorities currently raise about 15p in every £1 through the tax, and while the richest households pay two per cent of their earnings on average, those on middle incomes pay twice that.

Based on market values from 1991, the set-up sees those in the most expensive properties pay no more than three times the sum paid by Scots in the cheapest homes – even though estimates suggest top-tier addresses are worth 15 times more.

Although low-income households can apply for some tax relief, the commission said those where earnings varied week to week were not given enough help.

According to the commission, there are three ways to address such discrepancies in the system – creating a replacement property tax, a land value tax or a local income tax.

Unveiling the report, co-chairman Marco Biagi MSP said: “From the outset – having agreed that the present system is unfair and in need of reform – we have worked together in a spirit of consensus to understand the alternatives available to us and to put to the people of Scotland a report that clearly sets out the steps that can be taken to deliver change.

“It is now up to politicians from across the political spectrum to take today’s report and to use it to put to the Scottish people alternatives that are fair, workable and empowering for local communities.”

According to the report, council tax raises £2 billion a year for services including roads maintenance, education and refuse and recycling collection. The commission says there “is no one ideal local tax”, but its “predominant view” is that earnings are a “fairer basis on which to levy a tax”. Meanwhile, the council tax freeze – an SNP flagship policy – is said to be running out of time.

Current levels are at the same rate paid in 2007-8 and the Scottish Government has given local authorities an additional £70 million of funding from the Scottish block grant each year to pay for it.

The report said: “For eight consecutive years council tax bills have been frozen. But this cannot go on forever.

“Local tax and the funding of local services should be a central part of local democracy, with voters able to make choices about how much tax they should pay and for what level of public service.”

The Tories were the only major party not to sign up to the commission, and it is hoped the findings will impact on policy in the run-up to the Scottish Parliament election.

Yesterday the commission stressed that the chance for real change was “an opportunity not to be missed”.

Councillor David O’Neill, head of local government umbrella body Cosla and co-chairman of the commission, said: “We have conducted more in-depth analysis of potential alternatives to the present system of council tax than ever before, with the aim of promoting understanding and stimulating debate among the public and politicians."

Meanwhile, commission member Andy Wightman, local government spokesperson for the Scottish Greens, said the results were promising.

He said: “The council tax freeze has cost over £2.5bn that could, instead, have been invested in public services.

“The freeze has, in addition, undermined local democracy. This interference in local fiscal autonomy would be unconstitutional in countries such as Germany, and must end.”

Michael Gray: Reform of the regressive council tax is an exciting opportunity for Scotland