So, farewell council tax - the most hated form of local taxation since, well, the last one. Or perhaps the next one. There is a touching faith among the SNP and Liberal Democrats - who meet tonight to cement their agreement to scrap the tax - that local income tax will somehow work better than its predecessors: domestic rates, poll tax, council tax. I doubt if it will. They should think very carefully before pressing ahead with a measure which, any way you look at it, will increase personal taxation by around 15%.

Yes, I know that the other side of the deal is that people won't have to pay £1200 a year in council tax. And I know that the local income tax is, in theory, more progressive than council tax. But the practical reality is that voters will bank what they save on council tax (thank you very much) and still complain bitterly that their income taxes have been hiked, that council services have deteriorated and that wealthy older people are living practically tax-free in expensive houses they don't need.

There is nowt for nowt in local finance. I fear the Nationalists have believed their own propaganda that local income tax will somehow raise money without pain; that everyone will benefit. They won't, and the people who will most obviously lose out - relatively well-off middle-class working couples who pay twice through their income taxes rather than once through their house - are also the ones who are most adept at complaining.

Meanwhile, the really wealthy will hand it over to their accountants. Businessmen will start paying themselves in dividends and interest instead of income because the local income tax will not fall on "unearned" income. They'll also start pouring even more of their cash into housing because abolishing property taxes will likely give another huge boost to house prices. This means that middle-income couples will find it even more difficult to buy, and the people on lower incomes - who are supposed to benefit from scrapping council tax - will be priced out of homes for ever. Brilliant!

Older people in expensive houses do not need further tax concessions. It is absurd to subsidise people to hang on to houses that are too big just so they, or their offspring, can harvest tax-free capital gains. This wouldn't matter if we were building enough houses to reverse the house-price spiral, but we aren't. I'm afraid politicians - who are mostly double or triple home owners themselves - are simply incapable of addressing the housing crisis because they are not prepared to adopt policies that actually bring prices down.

Instead of fiddling with income tax, they could have made council tax work properly by reviewing property values in Scotland and levying council tax progressively. It is absurd that valuations for council tax are based on 1991 prices. Make someone in a £500,000 house pay 10 times the rate paid by someone in a £50,000 house - that would truly be progressive - and watch how house prices become affordable again. Housing is a pretty good general indicator of an individual's overall wealth and property taxes are difficult to avoid: houses cannot be shifted to tax havens abroad.

It doesn't make sense to load all taxation on to one tax base, and income is already taxed heavily. Income is a good thing: we need more of it. Taxation should encourage desirable economic trends and discourage undesirable ones, such as speculation on housing. We should be encouraging people to work and increase their incomes, while of course paying their fair share in tax. Encouraging people to live on unearned income and in overpriced assets is bad economics.

Moreover, the revenues raised from property taxes are local ones and go to pay for local services. If people don't like what councillors are doing with their money, they can vote them out. Under local income tax there will be no incentive for local authorities to improve services because their revenue is guaranteed by a centrally raised tax. It is very difficult to raise income tax locally because the firms who collect it would have to levy different rates of PAYE on employees who live in different council areas.

Then there is accountability. It's the same as the argument for tax powers for the Scottish parliament, which the SNP has been very keen to make in the past. It is strange that the very politicians who complain that Holyrood lacks accountability because it doesn't raise the money to pay for its policies are eager to strip what remains of fiscal accountability from councils.

Now, perhaps there are answers to all these issues and perhaps we will learn of them in the Scottish government's consultation document on local income tax this week. The government rightly says that council tax is hugely unpopular in Scotland, and that it made abolishing it a prominent plank of its election manifesto. But it's hardly surprising that council tax has a bad name when it has risen by 60% in the past eight years. This was an unsustainable rise and rightly led to resentment.

The SNP government has moved to address this grievance by introducing a freeze on council tax under its concordat with Scottish local authorities. You could argue that the freeze operates in a similar way to a centrally "capped" local income tax, which could be varied down but not up. This, indeed, is likely to be the compromise reached between the SNP and the Liberal Democrats tonight. It would allow the LibDems to argue that they had put the "local" back into local income tax. It would give some councils an incentive to be more efficient. But it might equally give all the other councils an excuse for doing nothing at all.

Politically, though, the main danger of local income tax, it seems to me, is that it would put central government very firmly in the firing line over local taxation. Does the SNP government really want to take on the burden of answering for the inadequacies of every council in Scotland? I think not. Yet every time the government moves to increase local taxes by increasing income tax, they will be under attack from disgruntled voters - and of course from the opposition parties - for taxing Scots more highly than people in England.

Of course, local income tax is not comparable to the hated poll tax of the 1980s, which wasn't related at all to ability to pay. But local income tax could be just as damaging to the government. Indeed, I wonder whether, once they think it through, this may be another manifesto pledge that will be postponed indefinitely.