Labour's council tax plan 'will spark class uprising'

• Labour to introduce new council tax band for houses over 212,000

• Opponents warn middle classes and pensioners worst hit by plans

• Timing of measures poor for Labour's pre-election rallying of key groups

Key quote

"Labour is risking a significant and ferocious middle-class revolt because it will be these people who are hardest hit." - BRIAN MONTEITH

Story in full LABOUR was last night warned that its plans to introduce new council tax bands would spark "a middle-class revolt".

Brian Monteith, the Tories’ Holyrood finance spokesman, made the claim after it was revealed that Labour was proposing a new top-rate council tax band and supports the revaluation of homes. In its submission to an inquiry into local-government funding set up by the Scottish Executive, Scottish Labour says it believed council tax should be retained.

The Labour submission adds: "It is easy to collect, hard to avoid, provides a stable source of revenue, and, with support available through the benefits system for the less well-off, it is fairer on all income earners.

"But we believe that there is scope for improvement to the current system of taxation, namely the introduction of additional upper and lower council tax bands to better reflect the changes in property values."

Last night, Mr Monteith seized on the Labour submission to claim that Scotland would now follow Wales, where the introduction of a new top band for homes valued at more than 424,000 and a revaluing, had led to a massive outcry.

Mr Monteith said: "Labour is risking a significant and ferocious middle-class revolt because it will be these people who are hardest hit."

He said that some home owners in Wales had moved through two council tax bands because of the revaluation, and that bills had gone up by as much as 70 per cent.

There has been a call for a new top band in Scotland because many homes are now worth more than the current band H, set at 212,000.

If the Welsh example were followed, the introduction of a new band I would mean householders paying up to 3,000 a year in council tax.

Last night, there were signs that Labour’s submission to the inquiry, which is being chaired by Sir Peter Burt, the ITV chairman, was causing concern among MPs who face an election in May.

A well-placed UK government source said: "The timing on this is poor in terms of the election. They may have had to submit this but someone has clearly been talking too loudly."

Russell Brown, the Labour MP who is fighting the Tories in Dumfries, said that the issue had to be handled properly.

He added: "I would not be wholly in favour of there being a new top band, although I would not be wholly against it. There are elderly people living in larger houses which might fetch a significant price, but that does not necessarily mean they would be able to pay a large increase in their council tax. If there were a higher band there would certainly be greater difficulties for people like that."

However, a spokesman for the Labour Party said that it had carefully considered its submission to the inquiry, which was set up by Andy Kerr, the previous finance minister, amid concern that the banding had not kept pace with the increase in house prices in Scotland.

Labour’s document to the inquiry states: "The council tax is an easy target for political parties on the fringes to attack, often using grandiose slogans such ‘Axe the tax’ or ‘Scrap the council tax’. There is an element of duplicity contained in these statements, as they in no way suggest that people would have to pay tax, only under a different system.

"Nobody likes to pay tax, so the idea of abolition, with no replacement, is an easy vote winner. But it is also a myth."

Mr Monteith said that the Tory plan to remove schools from local authority control and fund them directly from the Scottish Executive would cut council tax levels.

An SNP spokesman said that plans for a local income tax would mean that six out of ten pensioners would pay less and the majority of Scots would see their bills reduced.

The spokesman said: "Higher council tax bills will be bad news for Labour MPs at the general election, and their policy on this is a key weakness for Labour at Holyrood.

"People do not like paying tax, but they prefer to pay a fair tax rather than paying an unfair tax."