Hackney is a borough of London not exactly renowned for the prosperity of its residents. Yet anyone living in a modest family home in this deprived part of the capital pays more in council tax than the Prime Minister, who lives in a luxurious flat in prosperous Westminster.

In fact, a pensioner living in a Band E property in Hackney on a pension of only £13,000 a year paid £255 more in council tax last year than the Prime Minster, who earns more than £180,000. No wonder reform of this iniquitous tax is low on Gordon Brown’s agenda. But the pressure for change will grow with the news this week that council tax is to rise by an inflation-busting 5 per cent for most people in April.

This increase means that the bottom 20 per cent of earners will soon be paying more than 5 per cent of their salary to their local council (and that’s before parking fines are taken into account.) This is unfair in the extreme and makes some form of local income tax look an ever more compelling alternative. Not only would a local income tax be a far fairer way to raise revenue, but it would also be cheaper to run and harder to avoid. By some estimates, it costs four times as much to collect £1 of council tax than to collect £1 of income tax.

Of course, vigilance would be required to ensure that the introduction of a local income tax was not used as cover to increase the overall tax burden. And changing the way that local tax is raised does not solve the problems of an ageing population, gold-plated local authority pensions and council profligacy that are forcing council tax bills higher. These issues and the shamefully politicised distribution of central government funding to local authorities certainly need addressing. But by far the most pressing problem with local government is the way that the burden of paying for it falls disproportionately on those least able to afford it.

It is time for the Government to get radical on this rightfully hated tax.

Did they really think that we wouldn’t notice?

If you thought that dirty tricks were the preserve of the world of politics, you would be wrong. While your attention was diverted by the fun and frolics of the new year, a number of banks and building societies decided to sneak out news that they were cutting savings rates by more than last month’s quarter-point reduction in the Bank of England base rate.

Clearly thinking that New Year’s Eve was a good time to bury the bad news, Halifax announced that it was taking a scythe to some of its most popular accounts by cutting rates by up to 0.4 percentage points. Meanwhile, Nationwide, the building society that claims it is “proud to be different”, decided that it would not be that different after all by announcing that it, too, would reduce the returns on six of its accounts, including its popular Loyalty Tracker Bond, by more than a quarter of a percentage point.

The worst offender, however, was Alliance & Leicester (A&L), which cut rates across many of its accounts by up to half a point this week. Unlike the other banks, A&L is unable even to claim the credit of passing on the full base-rate cut to borrowers. The banks are taking the opportunity to restore margins in response to the rise in wholesale borrowing costs caused by the credit crunch. However, the extent of some of the rate cuts and the sneaky timing of the announcements leave a sour taste.

People looking to start or revive a regular savings habit in the new year must be vigilant about both the rates they are receiving and, as we report on the facing page, the catches on many accounts. A no-strings account that guarantees to beat the base rate for an extended period is a safe and hassle-free bet.

Ofcom must get up to speed with broadband stealth charges

It is a universal law that market regulators work at a glacial pace. More than a year after we highlighted the issue, Ofcom, the telecoms regulator, has decided to issue a consultation document investigating the surge in stealth mobile and broadband charges.

While such an investigation is clearly welcome, it is a little overdue. The problem with stealth charges in every industry, not least telecoms, is that they make it difficult for consumers to compare properly the cost of services. In short, they are anticompetitive.

When one company starts subsidising its headline rates with all manner of hidden fees and charges, there is an incentive for other companies to do likewise. In the telecoms industry, this ludicrous facade has led to situation where broadband is described as “free” but consumers must pay a premium for technical helplines and other auxiliary services.

All regulators need to get smart about this problem. Hidden charges frustrate consumers, distort markets and harm the business prospects of upfront and honest companies.