The Liberal Democrats have put plans to scrap council tax at the centre of their local election campaign.

Less than a month from the election date, party leader Charles Kennedy renewed his call for a new system of local government funding system.

He said that the June elections should focus on who can best run local councils.

"But they are also a chance for people to have a say on issues affecting all local councils, in particular of course how those council services are paid for," the Lib Dem leader added.

"We are offering people the chance in these elections to use their votes to help scrap the unfair council tax."

He said the government had allowed local taxes "to continue to rise" while the Conservatives "don't actually know what they would do about the council tax".

Ability to pay

Branding the existing system "extremely unfair", Kennedy said a local income tax would be based on "ability to pay".

"We are clear we want to scrap the council tax and we want to replace it with something that is both fairer and in the process cheaper to collect," he said at the campaign launch.

"The principle involved is a very simple one.  The more money you earn, the more you pay. The less money you have, the less you pay."

Kennedy added that local income tax would be fair, efficient and is a "tried and tested method of local taxation" which has worked in other countries.

The Lib Dems hope to cash in on growing anger in the wake of above inflation increases.

In the South West, pensioners have threatened to go to prison rather than pay the latest bills.

The government is currently reviewing local government funding but has warned that there are problems with the system of local income tax being proposed by the Lib Dems.

Whilst the government knows it is facing a rebellion over council tax, it is unlikely to back a local income-based charge.

"There are formidable practical obstacles to the introduction of a local income tax - both administrative obstacles and in terms of equity," said local government minister Nick Raynsford.

The Conservatives also rejected the Lib Dem policy, saying it would mean an average household in England paying £630 a year more in tax.

"Liberal Democrats want a return to 1970s-style rates of income tax, through a national top rate of income tax of 50 per cent and also a local income tax of 3.8 pence in every pound," said Tory local government spokesman Caroline Spelman.

"This could mean an extra £630 a year for a typical two-earner household in England.

"This proposal for local income tax does not add up. It would do nothing to address the underlying problem of manipulated Whitehall funding.

"Indeed, local income tax could make councils more dependent on Whitehall handouts, not less.

"Rather than robbing Peter to pay Paul, we need a fairer deal for councils from the government."