The Scottish Government's controversial plan for a new local income tax was today dealt a blow by finance professionals.

The Scottish Government's controversial plan for a new local income tax was today dealt a blow by finance professionals.

Industry specialists PricewaterhouseCoopers said the proposed levy, which would replace council tax, could be difficult to collect and put Scotland at a disadvantage.

Tax partner Rhona Irving said: "It's still not clear how workable the proposals would be and we believe more research into the rate of tax that would be needed to replace the amount currently collected by council tax is required.

"How Scotland would be perceived by the international business community if its headline rate of income tax was higher than the rest of the UK should also be considered.

"Many people are also concerned that the cost of collecting the tax will have an impact on business and will fall most heavily on the shoulders of the small businesses, the lifeblood of Scotland."

Her response to the government consultation follows mounting criticism of the scheme for a tax of 3p in the pound.

The UK Armed Forces Minister expressed "serious concerns" over the proposals at the weekend.

Bob Ainsworth said the introduction of the controversial tax would have a "damaging" impact on Scottish service personnel and could lower morale.

In a letter to Scotland's finance secretary John Swinney, Mr Ainsworth also said Ministry of Defence ministers felt the local income tax would be more unfair in its impact on the armed forces than the poll tax.

Consultation on the proposals ended on Friday last week.

The plans were unveiled in March as the "fairest solution" based on ability to pay.

The government said four out of five households in Scotland would be better or no worse off under a local income tax.

Council representatives Cosla narrowly voted to support the tax in principle.