Council tax bands should be abolished, giving local authorities the freedom to set their own flat rate levy, according to a report from a think tank.

In Moving beyond Mansion Tax, CentreForum argues councils should be allowed to retain any revenue raised from homes valued at £2m or below to pay for local services. Any tax raised from homes worth more than £2m, would be distributed nationally under the plans.

It argues this new system would make property tax fairer than the proposed Mansion Tax and would strengthen the links between taxpayers and local services.

Tom Papworth, associate director for economic policy at CentreForum and one of the report’s authors, said: ‘The Mansion Tax had all the hallmarks of something dreamt up by the campaigns team rather than the policy team. While superficially a means of soaking the rich, it was a flawed idea that in no way guaranteed that the extra tax burden fell on those with the broadest shoulders.

‘Rather than creating a new, complex and unfair tax, politicians should look to reform our existing property tax system. This should include a long overdue examination of taxing economic rent on land, and immediate reform to council tax to make it a fair and efficient means of raising money for local government.’

The report calls on the Government to set up a Royal Commission to help reform property taxation.

A Department for Communities and Local Government spokesman said: 'This Government will work with town halls to keep council tax down for hardworking taxpayers and ensure residents can continue to veto high rises via a local referendum.

'Over the past five years, average council tax bills in England have fallen by 11 per cent in real terms, giving families greater financial security and this Government will seek to continue this trend by working with councillors to deliver high quality and value for money services for the people they serve.'