The independent research institute said the levy could raise £6 billion a year if imposed at 1 per cent on all tax bands, which would help plug council funding gaps in England after years of cuts and rising demand for services.
Cllr Richard Watts, Chair of the LGA’s Resources Board, said: “The UK is one of the most centralised economies in the western world. Local government in England faces an overall funding gap of £8 billion by 2025. If local areas are given freedom and control over their own finances, and the responsibility for growing their local economies, they will be able to take a new approach to funding services in the future.
“Councils have called on the Government to consider allowing areas to retain a proportion of nationally collected taxes paid by their residents, such as income tax or stamp duty, along with appropriate redistribution arrangements and control over discounts and reductions.
“They also need the freedom to collect current local taxes differently, to support local priorities or introduce new ones, such as a tourist tax.
“Only with the right funding and powers can councils continue to lead their local areas, improve residents’ lives, reduce demand for services and save money for the taxpayer.”