The SNP government will take the first step this week towards abolishing the council tax. The plan is part of an economic strategy to make every household in Scotland £10,000 better off within 10 years and follows last week's announcement that the government was close to striking a deal with council bosses to freeze the unpopular property-based tax.

Finance secretary John Swinney has found the money within the administration's spending review to make the first moves towards abolishing council tax completely and introducing an income-based alternative for local government funding.

John Swinney's plan has emerged as he prepares to announce the SNP government's first budget and three-year spending plan on Wednesday.

The minister will explain how he intends to meet his party's commitments on police numbers, lower class sizes and freezing the council tax.

The Sunday Herald understands around £15 million has so far been found for abolishing a tax introduced by John Major's Conservative government, the repeal of which was a key SNP manifesto promise.

First Minister Alex Salmond is said to be confident he can win a majority at Holyrood for scrapping the council tax within the next four years.

Swinney's spending plans will be preceded on Tuesday by the launch of the Nationalist government's economic strategy, which will lay down his party's plans for boosting Scotland's growth rate.

He will state the government's commitment to matching the average growth rate of small EU countries by 2017, thus boosting the average GDP per household by £10,000 within 10 years.

The Sunday Herald understands Swinney intends to meet his objective via a combination of tax cuts and investment in public services. His economic strategy will provide the context for his first budget and spending review on Wednesday.

Swinney is also expected to announce cuts to business rates, which will come in next April.

The new government is struggling to finance its manifesto commitments on hiring 1000 extra police officers and cutting primary school class sizes. Other manifesto promises, such as grants for artists, may be delayed for a year or so.

Both Labour and the LibDems are expected to play hardball with the SNP's first budget, but the spending plan is likely to be pushed through with the support of the Tories and the Greens.

The Conservatives have only two "red line" issues, namely that the government cuts business rates and promises not to raise the so-called "tartan tax", neither of which will pose a problem for the Nationalists.

The Greens are also likely to support the SNP budget if aviation subsidies are cut and if ministers address the party's concerns about new road-building scheme.

Labour MSP Iain Gray said of the SNP's plans: "We welcome John Swinney's newfound belief that Scottish families can be better off under devolution, rather than face the huge cost of SNP plans for independence.

"What is extremely worrying is the massive cost to hard-working families of Alex Salmond's plans for a local income tax. This will hit Scottish families hard, and punish people that only the SNP seem to think are rich, such as teachers, nurses and firefighters."