By Steve Bargeton, political editor

FIRST MINISTER Alex Salmond yesterday put plans to scrap the council tax at the centre of his government’s legislative programme for the coming year.

A bill to replace the tax with a flat rate 3p local income tax was one of 15 new pieces of proposed legislation announced yesterday, along with moves to ban under-21s from buying alcohol from off-licences and restrict the displaying of tobacco in shops.

With Labour and the Tories pledging to keep the council tax and the Lib Dems in favour of a variable rate local income tax set by councils, the issue is set to dominate the political battlefield.

Announcing his government’s plans to MSPs yesterday, Mr Salmond threw down the gauntlet to his opponents— warning them the Scottish public would “judge harshly” politicians who want to maintain the status quo.

“This government is committed to replacing the regressive, unfair council tax with a fair system of local taxation based on the ability to pay,” he said.

“This change will lift thousands out of poverty and, by delivering a net tax cut of £281m, it will provide a vital financial boost to low and middle- income households across the country as the biggest tax cut in a generation.

“Eight out of ten Scottish families will be better off. Abolition of council tax will lift 85,000 individuals from poverty and it will save the average Scottish family between £350 and £535 a year.

“I have no doubt Scotland will judge harshly any MSP who votes to keep the council tax in the face of the overwhelming benefit that would flow to millions of ordinary Scots.”

But acting Labour leader Cathy Jamieson branded the local income tax plan the “tartan poll tax.”

“His plans for a local income tax are so discredited that even the SNP are ashamed to mention its name. Instead, it is transformed into the Abolition of Council Tax Bill,” she said.

“Whatever Alex Salmond decides to call them, the SNP’s tax plans will simultaneously make Scotland the highest-taxed part of the UK and damage local services. That’s why they are opposed by virtually almost everyone in Scotland, from the STUC to the CBI. The First Minister should stop pretending that he knows better and dump the local income tax now.”

Scottish Tory leader Annabel Goldie said, “The SNP is clinging to spurious claims that 80% of households will be better off. But that dodgy analysis is based on a false premise: it compares a subsidised new tax with an unsubsidised council tax.

“If the SNP can promise a tax cut of £281m to subsidise its unfair and unworkable income tax, then how much lower could council tax be if that same money were used to cut all current council tax bills? The key question to the SNP is this: when the LIT bill fails, what will you do with the £281m?”

But new Lib Dem leader Tavish Scott said his party supported the principle of local income tax and would work with the government on the detail.

“We want to see the abolition of the discredited council tax. Liberal Democrats want a genuinely local income tax and we look forward to working with the government to deliver that,” he said.

Among the other proposed legislation flagged up yesterday, the government plans that a Health Bill will include provisions for a tobacco sales registration scheme and restrict the display of tobacco products in shops.

A presumption against the closure of rural schools will be included in a Rural Schools Closure Bill.

“Since 1999, more than 50 rural schools have been closed,” said Mr Salmond.

“During that time, three have been kept open by ministers—all decisions made by this government.”

Mr Salmond also talked of three bills on “the governance of Scotland.”

A Referendum Bill will be introduced in 2010, in line with the SNP’s election manifesto commitment, a Public Services Reform Bill is planned to cut the number of public bodies by 25% by 2011, and to set up the new arts body Creative Scotland.

A new Scottish Parliament and Local Government Elections Bill will split the dates of the Holyrood and council elections.

Mr Salmond told MSPs there were plans for three environmental bills: on climate change, the marine environment and on flood risk management.

A Climate Change Bill would set a target of reducing CO2 emissions by 80% by 2050, with a “statutory framework” in place in order to support its delivery.

The Marine Bill would seek to increase protection of the marine environment but accommodate the long-term viability of interests like energy, shipping, tourism and conservation.

And a Flood Risk Management Bill was necessary because of a European directive, and would improve co-ordination and create a single enforcement authority for the safe operation of reservoirs.

There will also be three Bills for Scotland’s justice system. The Criminal Justice and Licensing Bill would build on the recommendations of the prisons commission and is likely to include proposals for a minimum price for drinks, a “social responsibility fee,” and banning the sale of alcohol to under-21s in off-licences.

A Legal Profession Bill will reform the legal profession and an Arbitration Bill is also being brought in to help companies and individuals settle disputes without going to court.