A bill to scrap the council tax in Scotland is to be introduced in the coming parliamentary year, MSPs heard today.

Douglas Fraser: "Alex Salmond was quick to regain control of the political agenda"

Full list of the SNP Government's bills

A bill to scrap the council tax in Scotland is to be introduced in the coming parliamentary year as part of the SNP's legislative programme for the country, MSPs heard today.

The announcement was made by First Minister Alex Salmond as he set out the Scottish Government's plans for the coming year.

He told parliament: "Abolition of council tax will lift 85,000 individuals from poverty.

"And it will save the average Scottish family between £350 and £535 a year.

"I have no doubt Scotland will judge harshly any MSP who votes to keep the council tax in the face of the overwhelming benefit that would flow to millions of Scots."

He disclosed the move in the first session of Parliament after the summer recess.

The minority SNP government's legislative programme comprises 15 bills, including one on flood risk management carried over from last year's programme.

Mr Salmond told MSPs the Budget Bill would include "fast-tracked investment" to support key areas of the Scottish economy and would fully implement the rates relief scheme for small firms.

Mr Salmond told MSPs the programme also included three environmental bills: on climate change, the marine environment, and on flood risk management.

"There is no dispute in this chamber that climate change is the one of the most serious threats we face," he said. "Urgent action is needed to cut emissions which cause climate change."

The Climate Change Bill would set a target of reducing CO2 emissions by 80% by 2050, with a "statutory framework" to support its delivery.

The marine bill would seek to increase protection of the marine environment but accommodate the long-term viability of interests like energy, shipping, tourism and conservation.

The Flood Risk Management Bill was necessary because of a European directive, and would improve co-ordination and create a single enforcement authority for the safe operation of reservoirs.

Mr Salmond told MSPs that three Bills were proposed for Scotland's justice system.

The Criminal Justice and Licensing Bill would build on the recommendations of the prisons commission headed by Henry McLeish by reforming community punishments.

It would also ensure serious and violent offenders were dealt with "firmly and effectively" in prison, and along with the creation of a sentencing council it would ensure public confidence in sentencing decisions.

A consultation on licensing reform ends later this month, which includes proposals for a minimum price for drinks, a "social responsibility fee", and banning the sale of alcohol to under-21s in off-licences.

The licensing bill will incorporate those reforms which need legislation, said Mr Salmond.

A Legal Profession Bill will be the "first significant reform" of the legal profession since the 1980s. An Arbitration Bill is also being brought in, Mr Salmond told MSPs.

A Health Bill will include provisions for a tobacco sales registration scheme and restrict the display of tobacco products in shops.

"These reforms will be supported by new resources at the front line," said Mr Salmond.

"The Scottish Government will commit an additional £9m over the next three years to support local government and the national health services deliver measures in the smoking prevention action plan."

A Children's Hearings Bill, relating to education and young people, will bring 33 separate bodies under one national body, said Mr Salmond.

A presumption against the closure of rural schools will be included in a Rural Schools Closure Bill, said Mr Salmond, which will improve consultations for all school closures.

"Since 1999, more than 50 rural schools have been closed," said Mr Salmond.

"During that time, three have been kept open by ministers - all decisions made by this government.

"The trend of rural schools closures causes us concern."

An Additional Support for Learning (Amendment) Bill will enable parents and young people to make out-of-area placing requests.

Mr Salmond also talked of three bills on "the governance of Scotland."

A referendum bill will be introduced in 2010, in line with the SNP's election manifesto commitment.

A Public Services Reform Bill is planned to help achieve the government's goal of cutting the number of public bodies by 25% by 2011, and would also enact proposals from Professor Lorne Crerar to reform the scrutiny process for public services.

This bill would also set up the new arts body Creative Scotland, "subject of course to Parliamentary will", Mr Salmond told MSPs who earlier this year voted down the financial aspects of the Creative Scotland proposals.

A Legislative Reform Bill would take forward proposals by a Holyrood committee for reforming the procedure for scrutinising proposed rules and regulations.

And a Scottish Parliament and Local Government Elections Bill will split the dates of the Holyrood and council elections.

"Regrettably, with this Bill we cannot assume responsibility for Scottish Parliament elections from London," he said.

"But we will enact Ron Gould's recommendation to separate the timing of Scottish parliamentary and local government elections by extending the current and next council terms of office by one year."

Labour leadership contender Iain Gray later urged the Scottish Government to ditch flagship policies "for the sake of Scotland's future".

Mr Gray issued the challenge as MSPs debated the legislative programme. He urged ministers to rethink the plan to introduce a local income tax, which he described as an "act of sabotage", a proposal to set up a Scottish Futures Trust as an alternative to private finance initiatives, and a plan for an independence referendum in 2010.

Mr Gray said: "The SNP should face the facts now and change their mind on the discredited local income tax, the unworkable futures trust, and unwanted separatism for the sake of Scotland's future."

Speaking about the legislative programme, he said: "This is a programme for a government determined to carry on regardless: regardless of the economic circumstances, regardless of the worries of the business community, regardless of the cost to the elderly, the disabled and our schoolchildren. Careless of Scotland's future."

The former enterprise minister said "discredited" local income tax plans were a "damaging inclusion" in the legislative programme.

"This is a tax which would not only undermine the economy but decimate local services with a shortfall of at least £800m," Mr Gray said.

"It is a tax which is going to undermine the economy and destroy local services. Frankly this begins to look less like an act of parliament and more like and act of sabotage.

"To boost business confidence this discredited idea should be junked and junked now."

He also said the Nationalists should drop their "unworkable and inexplicable" Scottish Futures Trust proposals.

"This is yet another flagship policy sinking under a tidal wave of criticism, uniting industry, local government and the trade union movement in opposition to it," Mr Gray claimed.

"This is a government which is succeeding in uniting in complete opposition to their flagship polices."

He also spoke about the uncertainty caused by "the constant desire for separation".

"The SNP have their very own sword of Damocles hanging over Scotland's future, a referendum on independence two years down the line," he said.

Despite Labour's opposition, Mr Gray said bills in the programme on climate change, the marine environment and flooding were "not only welcome but overdue".

However he added: "The test will be whether they get both the principles and the practice right and that they are taken forward in partnership, across the Parliament, and with the rest of the United Kingdom."

The Labour leadership hopeful also said decisions in the SNP's first budget to freeze the council tax and cut rates for small businesses had impacted on local services.

"For those who seek solace in the words of the song The First Cut Is The Deepest are in for a rude awakening, because the worst is yet to come," he said.

Deputy First Minister Nicola Sturgeon insisted the government's legislative programme was "full of energy, commitment and ambition".

She also told MSPs it also had an "unshakeable confidence in Scotland's ability to succeed".

The programme would build on what the SNP had achieved in its first year in power at Holyrood, highlighting measures such as the council tax freeze and moves to help the housing sector, Ms Sturgeon said.

"Over the past 15 months we have taken an approach to government that is based on vision, trust and competence," she said.

"We have worked hard to meet the ambitions of the people of Scotland, and we are doing everything in our power to help individuals and families with the rising cost of living.

"We have used the responsibility vested in us wisely and fairly, empowering local councils and communities wherever possible.

"We have taken care to get the big decisions right and we have earned a reputation of always putting Scotland's interests first.

"We will continue to govern responsibly and effectively."

Ms Sturgeon urged MSPs to back the SNP's proposals to replace the council tax with a local income tax.

Such a move, she said, would leave eight out of 10 Scottish households better or no worse off.

Challenging others to support the plans she said: "I believe, we believe, it is the duty of everyone who believes in fair, progressive taxation to back that Bill when it comes before this Parliament."

She told MSPs: "This is a Government that hit the ground running last May, a Government that has maintained its momentum ever since, a Government that takes decisions purely and simply in the Scottish national interest.

"It is now our challenge and our opportunity to continue to provide good, effective, confident and ambitious leadership of our country and continue to move Scotland forward."

Tory Deputy leader Murdo Fraser took the opportunity to congratulate the British Olympic team on its success in Beijing.

"Didn't it make us all proud to be British?" Mr Fraser asked as Nationalist ministers looked on.

"To see our boys and girls doing so well, with the union flag being hoisted to the top of the flagpole on so many occasions and our national anthem being proudly played.

"Didn't it make out hearts glad to see proud Scots like Chris Hoy wearing the colours of Team GB and waving the union flag?"

A row broke out last week when Hoy, the triple gold medal-winning cyclist, said an SNP suggestion for a Scottish Olympic team was "ridiculous".

On the legislative programme, Mr Fraser said the Tories back the proposal to decouple the council and Holyrood elections and will bring forward their own proposals on outdoor education.

He branded the Government plans on restricting the sale of alcohol as "draconian and ineffective".

"We believe that the way to tackle this problem is to enforce current legislation and tackle areas of abuse rather than adopt a blanket approach that tars everyone with the same brush," he said.

He also said the Government had got it "most wrong" over its local income tax plan.

"It continues to pursue its proposal to introduce an unfair, unworkable and discredited local income tax, despite all the opposition which came out of its consultation," Mr Fraser added.

Lib Dem finance spokesman Jeremy Purvis accused the SNP of using too few of its own economic levers to stimulate the economy.

"Powers in the labour market, for retail sales in local areas, affecting house prices and local housing markets, changing export markets with support for exporters - there are considerable levers," he said.

He added that decisions taken by the Government in the past year have created more "bureaucratic confusion, uncertainty and waste."

"At least £16m is being spent in start-up costs alone for a new national skills quango with a regional structure not even matching that regional structure of Scottish Enterprise," he said.

Mr Purvis also voiced concern that Scottish Enterprise will no longer be supporting small businesses, with that task moving to local councils.

"Business gateway contacts are now falling," the Lib Dem said.

"There has been a year lost in reorganisation, bureaucracy, rebranding, re-badging and renaming."

He branded it a "ridiculous situation."

A "real terms cut" in funding in training and research in colleges and universities also came under fire from Mr Purvis.

"Investment in our universities and colleges in research is needed as we are on the cusp of an economic downturn."