So, will the local income tax ever actually happen? Is Alex Salmond serious about introducing the most radical and risky fiscal innovation since the poll tax? Well, one school of thought in Holyrood last week was that the SNP are not quite as determined as they appear to scrap the council tax and replace it with LIT.

Liberal Democrat cynics believe that Alex Salmond will present his bill, push for it, get lots of headlines, and then when the problems arise, blame the Libdems and London for preventing him from dumping the hated council tax. The Libdems support local income tax in principle but they want councils to have the power to vary it marginally in accordance with local circumstances rather than have a common rate set centrally as the Scottish Government proposes.

Another obvious get-out would be to blame Westminster. The Work and Pensions Secretary, James Purnell, has repeatedly declared that his department will not continue to pay council tax benefit if the council tax is scrapped. Since this is worth around £400m a year, the loss of this subsidy would blow a huge hole in the local income tax accounts.

Last week, Alex Salmond described London's refusal to continue the benefit as "embezzlement" of Scottish tax-payer's money - a significant rhetorical escalation in this row. The Scottish Parliament has power over local authority finance and the SNP say it is unacceptable for London to withhold historic local tax subsidies just because the Scottish parliament has changed the method of raising it.

The Tories - who oppose local income tax - appear to agree and have said they would negotiate over the £400m. Cathy Jamieson, former deputy leader of the Labour group in Holyrood and leadership contender, has also suggested that she believes council tax benefit should continue, though the Prime Minister doesn't agree.

So, would Salmond use council tax benefit to get him off the local income tax hook? Well, this presupposes that he is on a hook to begin with.

Many in the Scottish media can't believe the FM is serious because they are convinced local income tax is a daft idea - a dangerous irrelevance that would increase headline income tax, erode local authority accountability and penalise middle class couples who work. The SNP plans were rubbished by many respondents to their consultation on LIT, including trades unions, CBI accountants like PWC and many others.

There is a widespread belief that the idea has been discredited and that it's only a matter of time before Alex Salmond realises it. But I'm not so sure.

My understanding is that the SNP really do want to get the bill passed this year and aim to have council tax abolished on the eve of the next Scottish elections in 2011, thus giving them a strong platform on which to go to the country for a second term in office. So unpopular is the council tax that this could certainly be a vote winner, especially if most of the opposition parties are also coming round to the idea of scrapping the tax but don't know what to replace it with.

The problems with LIT - mainly that it would allow rich older people living on unearned income to live in big houses practically tax free - would not be immediately apparent to the voters. Nor would the problems faced by Scottish firms trying to attract workers to a country with one of the highest headline rates of income tax in Europe.

There are some real enthusiasts for LIT among the SNP. They insist that it works well in countries like Denmark and Sweden, that it is seen as fairer and more progressive than council tax because it is based on ability to pay, and that it has actually improved local accountability because it has fiscal legitimacy. My own view is that there is no obvious reason why the SNP and the Liberal Democrats should not come to a deal over this. In Sweden, local authorities set their own rate of local income tax.

Nick Clegg, the Liberal Democrat leader, has spoken in favour of LIT in Scotland and apparently slapped down the LibDem UK spokesman, Ed Davey, who said that you couldn't introduce it in only one part of the UK. With the Liberal Democrats on board, that brings it down to the support of the Greens and Margo MacDonald. I think the Green MSPs - who favour land value tax - could be persuaded and so could Margo, given the right inducements.

After all, it is Salmond who is taking the big risk here. The FM seems determined to put his credibility on the line over a new tax which could well backfire. Labour think Salmond has finally over-reached himself over LIT. But whether that is true remains, as BBC correspondents like to say, to be seen.