Council tax bands could be revamped under new proposals

The Balance of Funding Review is expected to include plans to increase the number of property price bands in a bid to make the system fairer.

It might also call for regional price bands and suggest returning business rates to local authority control.

But local government minister Nick Raynsford played down reports those in expensive homes would face huge rises.

Starting process

Press reports suggested people living in homes worth more than �170,000 would shoulder a greater financial burden - lifting the load from those living in cheaper homes.

But Mr Raynsford said the claims were based on a report to the government which was not policy.

Ministers were "at the start" of a process with more thinking to do, he said.

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In June Tony Blair hinted that the tax could eventually be scrapped, but the local government minister's statement is expected to be less radical.

Just options

Mr Raynsford said: "The Balance of Funding Review paper to be published on Tuesday is a report to government, not by government.

"That means it contains no government proposals - and any suggestion that we have opted for any particular course is just plain wrong.

"What has happened... is that a proposal from an outside body has been treated as if it was either being put forward by the government, or had been endorsed by the government. Neither is right.

"All this paper includes is a range of options which need to be examined much further, but we are at the start of this process - and there is a lot more thinking to do."

'Stealth' tax

The Sunday Telegraph reported council tax bills for the most valuable properties - worth more than �620,000 at current prices - could rise from their current level of �2,334 a year to �6,224 in three years.

For homes in the �310,000 to �440,000 bracket, charges could go up from �1,949 to �2,982, the paper said.

Those with homes worth between �170,000 and �230,000 would reportedly see them rise from �1,424 to �1,556.

Shadow local government minister Caroline Spelman accused the government of using the funding review - and the nationwide revaluation of properties planned for 2007 - to "increase council tax further by stealth".

Capping

Liberal Democrat local government spokesman Edward Davey said: "We need to scrap council tax for the American and European system of local income tax."

On Monday Mr Raynsford moved to cap the budgets of six local authorities saying the government was acting to keep council tax increases down.

All of the authorities involved had received increases in their general grants that were above inflation, he argued.

The six authorities being capped were Torbay Borough Council, Nottingham City Council, Herefordshire District Council, Fenland and Shepway District Councils and Hereford and Worcester Fire Authority.