Councils could get a share of income tax in radical plans to offset swingeing budget cuts.
Nicola Sturgeon has said the SNP will consider boosting council coffers with a share of income tax revenues.
Local authorities are facing hundreds of millions of pounds budget cuts next year.
The first minister told an audience in Edinburgh last night that the plan could help boost economic growth by giving local
authorities a vested interest in raising income tax receipts.
She also hinted that the SNP will introduce a “more progressive” council tax if they win the Holyrood elections on May 5.
A cross-party commission on local government funding that included the SNP said the current system in Scotland “must end” and suggested three alternative taxes based on land, property or income.
Ms Sturgeon told the David Hume Institute last night: “The changes to council tax that we will propose are part of a longer-term plan.
“In particular, we will discuss with local authorities how we can assign a share of income tax revenue to their funding.
“That means that if councils succeed in boosting economic growth, and consequently income tax receipts, they will share in some of the benefit.
“And it also means that local government funding will be more broadly based. Income tax, and a more progressive council tax, will both play an important part.
“It’s an approach which goes a long way towards meeting an important concern of the Commission on Local Tax Reform – that income and property-based taxes together would be a better source of revenue than council tax alone.
“It’s a further example of how considering expert evidence can help us to propose a better tax system.”
Ms Sturgeon said the tax plans would be unveiled next week.
Her administration has come under sustained criticism for slashing local government budgets, with both Scottish Labour and the Scottish Liberal Democrats proposing to raise income tax by 1p to offset the cuts.
Ms Sturgeon added: “Taxation policy is, at heart, inseparable from questions about the sort of society we want to see – the sort of country we want to live in.
“Our approach to taxation recognises the interdependence of greater equality and higher growth – of encouraging enterprise
and promoting fairness.”