VOTERS are now more worried about being able to afford rising council tax bills than paying mortgage or credit cards, according to a new study from a major York firm.

The research, by CPP Card Protection Plan, came as council tax emerged as a political hot potato in the General Election campaign.

Holgate Road-based CPP, one of the city's biggest employers, says the Liberal Democrat pledge to replace council tax with a local income tax could prove a winner on May 5.

New figures show 33 per cent of 2,000 people quizzed in the survey were worried about the "town hall" tax, compared to 19 per cent three months ago.

The worldwide product and service provider, which has its international HQ in York, said this was the first time the tax had overtaken mortgages as the single home expense voters were most concerned about since the CPP Financial Health Index launched three years ago. Nearly 54 per cent of people aged over 55 feared paying council tax the most, the study reveals.

Shirley Woolham, head of financial health at CPP, said: "For a lot of people, council tax now has the worry of being regarded like a second mortgage and they have real concerns how they are going to pay it."

Council tax blew up into a big election issue after the Tories warned residents they faced a "ticking tax timebomb" in the wake of a nationwide property re-evaluation and high house prices.

If changes made in Wales were duplicated in property hot spots like York, they warned, one in three homes could be bumped into a higher valuation band and see their taxes rise by more than £200.

Andrew Waller, Liberal Democrat candidate for York, welcomed the debate.

He said: "A local income tax would leave an average household income family on £22,000 paying £469, nearly half of what they are paying now.

"Importantly, it would mean pensioners who have incomes below the threshold for income tax would not pay it."

Conservative candidate Clive Booth's party have vowed to scrap any revaluation. "When it was introduced in Wales, it added an average of £240 to each household."

The Tories plan to give pensioner households council tax discounts of up to £500 a year, and Mr Booth added: "We are opposed to revaluation. The system, if properly deployed, works very well."

Labour has said it would give OAPs a one-off £200 discount on council tax bills. Hugh Bayley said his party did not want to prejudge the outcome of a cross-party council tax review.

But he said the Lib Dem plans would add 4p in the pound to income tax.

He said Tory proposals gave bigger discounts to OAPs in big houses, and more to pensioners in the south than the north.

Updated: 10:56 Tuesday, April 26, 2005