ELECTORAL victory will explode in Tony Blair's face if he takes the wrong step in the council tax minefield.

Changes to the rates never win votes, but they lose plenty. The seemingly unassailable position of Margaret Thatcher was poleaxed by the poll tax.

Now New Labour ministers are preparing to review the council tax. They are right to do so.

The tax creates obvious anomalies. People of wildly different incomes end up paying the same duty because of the broad banding system. Meanwhile, householders on similar incomes pay wildly different amounts due to their postcode.

Get council tax reform wrong, however, and Mr Blair will face rebellion. People are angry about seemingly endless, inflation-busting tax hikes, such as the 8.5 per cent rise in York.

A system pegged to the value of housing will always be flawed. According to a leaked briefing paper, anyone living in a house worth £170,000 or more may soon be subject to huge council tax increases.

But thanks to the madness of the property market, pensioners and middle income families now live in a home with such a price tag: they cannot afford to pay more.

This issue is particularly sensitive for this Government. Its promise to increase public spending but not income tax has led to burgeoning stealth taxes - the primary one being the council tax.

According to an independent assessment, council tax will bring in £18.6 million to the Treasury this year, compared to £10 million in 1997. Yet Whitehall is still not paying enough to councils to pay for its promises on school spending, the Local Government Association chairman Sir Sandy Bruce-Lockhart said today.

Voters have rumbled this con trick. Tread carefully, Mr Blair.

Updated: 09:30 Monday, July 19, 2004