The future of the council tax is shaping up as a key issue in the contest for the Labour leadership in Scotland.

All three candidates have now come out and said that the council tax in its present form is untenable, but Andy Kerr believes that it is incapable of being reformed and must be scrapped in favour of a replacement system other than local income tax.

"I would immediately signal a long-term desire to replace the council tax," he said at the weekend.

"While people are paying so much of their monthly income in council tax in comparison to their mortgage or income tax, they feel as though the system is not working for them."

Mr Kerr wants to work closely with councils on reform, but like his opponent Cathy Jamieson he was in the Scottish Cabinet which asked Sir Peter Burt to come up with an answer to the problem and then rejected his conclusions.

Sir Peter, whose committee also rejected local income tax, suggested a system based on a percentage of property values. This would have greatly widened the range of payments compared to the current council tax bands, but would have continued to be punitive for those on low incomes in more expensive property, such as pensioners staying on in the family home.

Mr Kerr added: "We need to return to Burt, build a consensus inside and outside the Parliament, and work with local government on how we respond to abolition of the council tax and what we replace it with."

Early on in her campaign Cathy Jamieson said that council tax "as presently structured" was unfair but said local taxation had to be based on a fair property tax rather than an unworkable local income tax.

She also pledged to bring forward legislation to bring relief to pensioners by exempting them from water rates. But a campaign aide insisted there could be no complete answer to the dilemma inside the timescale of the contest.

Iain Gray was out of Holyrood for four years during the period when Labour ministers rejected the Burt Report, but he too has come out in favour of reform. "I believe in a property tax but we should be open to other ideas including elements of land value tax too," he said.

The SNP's Kenneth Gibson, said: "The case for a fair local income tax is becoming even stronger, as Labour leadership candidates and MSPs fall over each other in their new found enthusiasm to scrap the council tax. It's just a shame they voted in exactly the opposite way in the Scottish Parliament."

He added: "Andy Kerr's U-turn exposes Labour's absurd position on council tax benefit money. They argue that this £400m would be removed from Scotland if the council tax is scrapped, a stance that Mr Kerr cannot possibly support if his commitment to abolish council tax amounts to anything more than campaign rhetoric."

The Nationalists also mocked the three Labour contenders over the findings of a YouGov survey commissioned by the SNP showing that 76% knew little or nothing of Iain Gray, 62% knew little or nothing of Andy Kerr, while for Cathy Jamieson the figure was 38%.

In contrast 89% knew a lot or something about Alex Salmond, 72% knew a lot or something about Nicola Sturgeon, while the equivalent figure for Tory leader Annabel Goldie was 61%.