A FAIRER system of local taxation is set to be introduced in Scotland with the rich set to see their bills rise by ten times more than the poor, a new analysis has found.

The Resolution Foundation, a left-leaning think tank, said that England was set to be left with the most regressive local taxation system in the UK after all five Holyrood parties backed reform.

In its 'Battle of the Bands' document, it said that SNP plans, to leave the existing model in place but increase bills for those in the top four bands and end the council tax freeze, amounts to a progressive tax increase with half of an extra £100 million in revenue being drawn from the richest 20 per cent of households.

The report shows that the average cash loss for the richest tenth of households would be £125 – over ten times the average loss across the bottom half of the income distribution - with additional benefit changes to leave some poorer households better off.

The reforms, which has been criticised in some quarters for not going far enough and leaving a system that analysts have said will remain regressive on its own merits, are by far the most likely to be implemented with the SNP the runaway leader in opinion polls ahead of the May 5 vote.

Adam Corlett, Economic Analyst at the Resolution Foundation, said he hoped the debate would inspire action south of the border. He added: "Britain’s council tax system is out-dated, unfair and in urgent need of reform. While the issue has largely been ducked in England, Scotland now looks set to embark on significant improvements.

"Plans the SNP aim to implement next year would see a £100m tax increase with the richest tenth of households accounting for half of the extra tax take while lower income families would on average face a negligible tax rise. Some low income households would actually be better off after the changes, and increasing the take-up of Council Tax Reduction would further reduce the impact on these families.

"It’s encouraging that while the proposals offered by Scottish parties differ in design and by the amount they raise, all improve the proportionality of the system.

"The upcoming Scottish election looks set to be a key battleground for progressive taxation of properties – as well as incomes. It’s a debate that will likely benefit lower income households in the round, whichever party prevails, and one which parties across the UK should look to."

Labour and Green Party proposals would bring in more radical reform, including scrapping the council tax and a revaluation of properties which will remain based on 1991 prices under the SNP's plan, but take longer to implement.

Scottish Labour has said it would tax properties worth £180,000 or less at £450, plus 0.35 per cent of the property value. For homes worth more than this, the portion of the value above £180,000 would attract a rate of 0.9 per cent of the property value, with total annual bills capped at a maximum of £3,000 and the plans revenue-neutral.

The Scottish Greens have said they would raise around £500m by bring in a residential property tax which would see homes taxed at around one per cent of their values, after a tax free allowance of £10,000 is taken into account.

While the Scottish Liberal Democrats and Scottish Tories are yet to reveal detailed plans, both parties are expected to make proposals that would see bills rise for those in more expensive homes.

The Resolution Foundation report backed reform, saying the current system is out-dated and disproportionately taxes those in lower value homes. It shows that the current band structure creates a tax rate of over 1.5 per cent of a property’s value in the cheapest homes, compared to less than 0.1 per cent in the most expensive homes.