The report finds that council tax is not currently working, and shows that it doesn’t raise enough money - Scotland would have £600 million more to spend each year if council tax matched bills seen in Wales and £900m a year if bills matched the average in England.

IPPR Scotland’s research also found that council tax is out of date as the home values used for setting council tax bills are 30 years old.

The report reveals that council tax is unfair as low to middle income families pay the most as a proportion of income and higher value properties pay the least as a proportion of value.

Given house prices increased by over 8% in 2020, and that higher income households have seen their finances improve on average through the pandemic, the report indicates that it is time to reform council tax to help generate income to invest in Scotland’s Covid recovery.

IPPR Scotland has called for radical reform including replacing council tax with a percentage of value tax and setting annual bills at 0.75% of a home’s value.

This could be introduced slowly alongside the existing council tax system for new purchases, or for all properties in one go. Once fully rolled out this would see higher value properties, and all properties in Bands F-H, pay more than now.

Given this would take a number of years to implement, IPPR Scotland has also recommended improvements to the existing council tax system for the shorter term.

The think tank is now calling on the next Scottish government to pledge to close the council tax income gap between Scotland and the rest of the UK by the end of the next Parliament, raising hundreds of millions of pounds for Covid recovery.

It is also urging the government to increase bills for higher value properties more quickly than the rest throughout the next Parliament, making council tax fairer to ensure everyone pays their fair share and raising almost £400m a year by 2025/26.

IPPR Scotland has also called on ministers to take all families in poverty out of paying council tax altogether by the end of the Parliament, lower bills for low-income families and make council tax fairer.

The report also calls on the next Scottish government to consider testing new local taxes such as local carbon, estate and land taxes.

Russell Gunson, director of IPPR Scotland, said: “We need to talk about tax in this election. Whoever wins in May, it’s likely that taxes in Scotland will need to increase to help invest in the Covid recovery and build a fairer Scotland than went into the pandemic. With house prices increasing, benefiting the wealthiest the most, we think reform of council tax could be a fair and progressive part of the solution.

“Council tax is out of date and unfair. Lower income families currently pay the highest bills as a proportion of their income. It also doesn’t raise enough money, with public services in Scotland losing out on hundreds of millions of pounds a year compared to money raised through council tax in the rest of the UK.

“The next Scottish government should replace council tax, with a new tax based on a percentage of home value. This would mean everyone would pay their fair share. In the meantime we must see improvements to the existing council tax system, with bills increased for higher value homes and bills reduced for low income families. No one in poverty should be asked to pay council tax.”