SARAH Boyack will press for an overhaul of the council tax system if she wins the Scottish Labour leadership next month.

The outsider to succeed the outgoing leader Johann Lamont said more powerful and better funded local authorities were at the heart of her vision for Scotland.

She called for a "double devolution", putting councils in charge of housing benefit and employability schemes when they are devolved from Westminster.

But she said a fairer council tax was needed to pay for services after seven years of frozen bills under the SNP Government. The Lothian MSP suggested redrawing the present eight bands, ­raising the prospect of considerably higher charges for those living in more expensive homes.

She praised John Swinney's recent replacement for stamp duty, the Land and Buildings Transaction Tax, which increased the cost of buying homes over £325,000, and vowed to press the Scottish Government for an immediate reform of council tax on the same principle.

She said: "Local government finance is broken and [the Scottish Government] needs to accept that local government services need to be properly funded.

"A fairer council tax - a fairer property-based tax system - has to be the way forward. There are a number of ways you could make the system fairer but the debate is something that should be on the agenda now."

Ms Boyack said she would also allow councils to pilot local tourism taxes and create green power and bus companies to raise revenues.

Her plans will be included in a list of "100 ideas for Scottish Labour" which is due to be published as part of her leadership campaign.

As transport minister under Donald Dewar, Ms Boyack introduced free bus travel for pensioners and said the perk should be retained along with other popular entitlements, such as free prescriptions, which had been questioned by former leader Ms Lamont.

But she added: "The key is having a progressive tax system that works."