The Local Government Association has proposed a raft of alternatives to replace the council tax.

Launching a consultation document on Thursday, the organisation said the present property-based tax was unfair and needed to change.

Business organisations such as the CBI have criticised their proposal that business rates, collected locally and then redistributed nationally by the government since 1990, should be returned to local control to increase accountability.

Shadow local government secretary David Curry said: "The government is at the heart of the current council tax crisis. It has loaded expenditure demands on local authorities without giving them the grant to pay for it. This has meant that councils have had no choice but to ask council tax payers for more money.

"It is clear that this burden has to be relieved, but it is unrealistic to simply add to local government revenues. Of course it is right to look at other ways in which local government can be financed. But we do not want a system that is so confused that it is difficult for voters to understand."

Edward Davey, local government spokesman, said:"I am delighted that the all-party LGA are shifting towards support for a local income tax.

"It would be unwise for ministers to rubbish local income tax, as they had tried to do previously, since it now has the support of their own councillors and those from the Conservative Party.

"A local income tax is the most simple, fair and transparent solution."

Forum Response: Local Government Association

Sir Jeremy Beecham, LGA chair, said: "The council tax system is buckling under the weight of new responsibilities and expectations placed on local government to deliver more and better public services.

"There is a growing consensus around the belief that council tax needs reform. Uniquely, we are building a consensus for its replacement. And perhaps unprecedently for a lobbying organisation, we are not asking for more central government grant, but less.

"Our alternative passes responsibility and accountability to local people. We are prepared to take on that duty because we know it will make for healthier local democracy.

"The government should be accountable for national spending decisions, and we should face the ballot box for local ones, provided there is a mechanism to ensure that more deprived areas get the top-up resources they need.

"Local voters should know who is to praise or who to blame for the good and bad spending decisions. This is a way forward. The process of consultation we embark on today should help kick off a real debate and build that consensus for reform."

Forum Response: Local Government Information Unit

Dennis Reed, chief executive of the Local Government Information Unit, said: "The LGIU welcomes the LGA's contribution to the debate about a less regressive alternative to the council tax and the options for a wider range of local taxes and charges that would raise a greater share of council revenue locally and take pressure off domestic taxpayers.

"The CBI is protesting too much about the idea of relocalising the business rate. In 1989/90 businesses met 31 percent of local authority spending in England. With business rates linked to inflation since 1990, the business contribution has fallen steadily as a proportion of town hall revenue. Moreover, business has contributed only 15 per cent towards the new money going into local government since 1997. In 1997/98 the business sector business met 26.5 per cent of council spending. This was only 22 per cent by 2003/04.

"With central government grant not meeting the resulting shortfall, and with the restricted options available to councillors, council taxpayers have suffered the largest increases. In 1997/98 they supported just over 20 per cent of council spending. This is currently 26.9 per cent. With the regressive nature of the council tax, it is little wonder that there are protests.

"Returning the business rate to local control would be a huge leap towards town halls raising most of their income locally. It would boost local democracy and ensure that businesses and local residents paid their fair share towards the services they use. Such a move should not be dismissed as anti-business, but welcomed as pro-local democracy, encouraging a stronger link between local companies and their councils."