Support for Alex Salmond’s flagship bill to replace the council tax with a local income tax has plummeted in the past year with fewer than half of voters now in favour of the plan.

A YouGov poll for The Sunday Times reveals that only 46% of voters now favour the tax compared with 88% last year.

The survey reveals that Salmond’s leadership continues to enjoy popular approval while support for Labour is in the doldrums.

If a vote for the Scottish parliament was held tomorrow, the Scottish National party would extend its lead from one to 23 seats.

Salmond is Scotland’s most popular choice of first minister, with an approval rating of 41%, compared with 7% for Labour leadership challenger Cathy Jamieson, and 5% and 3% respectively for her rivals Andy Kerr and Iain Gray.

The survey showed support for the SNP in the Holyrood constituency vote up nine points on last May at 42%, with Labour 16 points behind on 26%, the Scottish Liberal Democrats on 15% and the Scottish Conservatives on 13%.

In the regional vote, the SNP was on 35%, 10 points ahead of Labour, with the Tories and the Lib Dems both on 14%. That would give the SNP 59 seats (+12), with 36 for Labour (-10), 15 for the Tories (-2) and 19 for the Lib Dems (+3).

However the survey reveals that Salmond risks squandering his support if he pushes ahead with his plan to replace the council tax with a 3p in the pound levy on incomes.

In April last year, the first minister described the local income tax (LIT) as “a winning policy” when a poll, commissioned by the SNP, found that 88% of voters backed it. At the time only 12% said they wanted to keep the council tax.

The latest YouGov poll of 1,355 Scots found only 46% now support the measure while 31% want to keep the council tax and 23% are unsure.

Yesterday Labour stepped up its offensive, claiming the Scottish government could employ 10,000 new teachers if it invested the £281m it will cost to implement the LIT in education.

“Alex Salmond has got his priorities badly wrong,” said Labour’s education spokeswoman Rhona Brankin.

“Ministers could use the money to cut class sizes and provide a guaranteed job for every newly qualified teacher. To hold this money back in the face of a crisis in our classrooms is disgraceful.”

Annabel Goldie, the Scottish Tory leader, called on Salmond to ditch LIT, which had been “roundly ridiculed” and use the £281m to cut council tax bills.

The first minister argues that 80% of Scots would be either better off or no worse off under the LIT. But ministers admit that almost a third of households with more than one earner will pay more under the new system. The highest earning 10% of households will be on average £785 a year worse off.

Many middle-earning households and some pensioners and students will pay more while some of Scotland’s wealthiest people will pay nothing because those who live off savings and investments will be exempt from the charge.

The collapse in support for the SNP’s reform follows a hostile reaction from business leaders, trade unions, councils and other professional bodies.

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