People living alone in large homes should be exempt from their council tax discount to free up more money for struggling families on low incomes, the Local Government Association (LGA) has suggested.
Single dwellers currently receive 25% off their council tax bill, but under new proposals the LGA wants councils to have the flexibility to adjust the discount for working people living alone in homes rated council tax band E and above.
Its own analysis has shown that it is costing councils more than £200 million a year to give the compulsory discount to people living in such properties, which are typically bigger and more expensive than the average family home.
At the same time, it said one in three local authorities expects they will have to reduce council tax support for families on low incomes because of a major shortfall in Government funding for the subsidy.
The LGA, which represents councils in England and Wales, has set out proposals for reforming the single person discount in a submission to the Treasury ahead of this year's Budget.
It said that discounts for single people in smaller homes would remain protected, along with the reduction in price for pensioners.
Peter Fleming, chairman of the LGA's improvement board, said: "Funding for council tax support would fall by £1 billion over the next two years if the reduction in the money we receive from Government to provide it was passed on to residents.
"As a result, increasing numbers of local authorities are facing the unpalatable choice of whether to reduce the council tax discount for the working poor or make additional cuts to local services.
"It is difficult to justify why discounts for wealthy professionals living in large homes are protected while nearby there are low-income families struggling to make ends meet who are having their discounts cut.
"This 'wealthy bachelor' discount currently costs councils £200 million per year in lost council tax revenue and is subsidising individuals occupying large homes at a time when there is a dire shortage of housing. Giving local areas the option of removing this automatic discount would help protect discounts for struggling families and those who need it most."
Local Government Minister Brandon Lewis said: "Single person council tax discount is a long-standing feature of the council tax system, reflecting the fact that single adults make less use of local services than larger households. We have absolutely no plans to change this discount, and we have rejected the LGA's calls for a Bridget Jones tax."