By Steve Bargeton, political editor

THE SCOTTISH Government yesterday vowed to press ahead with controversial plans to scrap the council tax despite formidable political, business and trade union opposition.

Ministers froze council tax this year and want to replace it with a flat rate 3p local income tax.

The consultation on that proposal closed yesterday. The CBI, the Institute of Directors and the Institute of Chartered Accountants of Scotland have all expressed concerns about the plan.

The Federation of Small Businesses said it made “bad business sense” and could harm Scotland’s competitive edge against England.

Local income tax is also opposed by the STUC, Unison and the National Union of Students.

At Holyrood, Labour and the Tories have vowed to fight any moves to bring in local income tax.

The Liberal Democrats back the principle, but want councils to be allowed to fix the rate at local level.

Despite the heavyweight opposition, finance secretary John Swinney said yesterday that the government will press on with the plan, which ministers claim will benefit four out of five households.

“The public were frustrated by the fact that there was no change under the last administration for eight years,” he said.

“An unfair council tax was allowed to carry on—this administration is doing something about it.

“We will look at all the information that’s come forward and bring forward a proposal to parliament in the autumn.

“But in all of this we have to bear in mind where the public is in this question.

“The council tax has increased by 60% since 1997—it has punished hard-working families in Scotland,” he added.

The Scottish Government will set out its formal response to the consultation in the autumn, with a bill expected to be laid before parliament in 2009/10.

Commenting on the consultation exercise, Labour finance spokesman Iain Gray said, “It is absolutely clear from those organisations that have published their submissions or commented publicly that this consultation exercise is a damning indictment of the SNP’s proposals.

“If the word ‘consultation’ means anything at all then Alex Salmond should listen to what he is being told and dump his unpopular plan to make Scotland the highest taxed part of the UK.”

The Tories say there should be a 50% cut in council tax for pensioners across the board.

Enterprise spokesman Gavin Brown said, “The current system is certainly not perfect, but I think it is better than the option we have on the table from the government.”

With Labour and the Tories opposed to the idea of a local income tax, the SNP will need the support of the Lib Dems to have any chance of introducing it.

Yesterday the man tipped to be their next leader, Tavish Scott, said, “Liberal Democrats believe that the discredited council tax should be replaced with a fair local income tax based on ability to pay.”