Wiltshire Council is set to lose up to £3.5m from its budget after the government announced plans for a 10 per cent cut in the council tax relief funding that local authorities receive.

Wiltshire Council spends around £27 million annually on council tax benefit and this is currently funded in full by a central government grant.

It is expected that Wiltshire Council will lose between £2.7m and £3.5m in funding from the planned reduction with a confirmed figure expected to be released in December.

To combat this shortfall Liberal Democrats in Wiltshire have called for the tax relief given to those who have second homes and the tax relief on empty on homes to come to an end.

Wiltshire Councillor Jon Hubbard, Liberal Democrats leader, said: "If the Conservative administration fails to end tax relief for the very wealthy on second homes and empty homes, it will be the poor and vulnerable who will feel the effects".

Cllr Hubbard has also called for Wiltshire Council to use new powers handed to them by the government which would allow them to charge 150 per cent on empty homes in the region.

He said: “With a nationwide housing shortage, we should be doing everything we can to encourage owners to rent or sell their homes.

“By doing this, the Conservatives would be able to go a long way to filling the gap left by the reduction in central government grants as charging 150 per cent council tax on empty homes in Wiltshire would help raise £307,000 in a two year period and this could mean savings for every council tax payer.”

Wiltshire Council have set up a consultation to explain the charges, which will start in April 2013, when the government will stop the national council tax benefit scheme as part of the cuts and a local council tax support scheme will launch.

Wiltshire Councillor John Thomson, cabinet member for housing, who represents the Conservatives, said: “We are currently consulting on the many options available to us to help make up this shortfall, and I am pleased Mr Hubbard is entering into this debate. I would encourage everyone to complete the survey at www.wiltshire.gov.uk/counciltaxsupportscheme or request a copy by calling 0300 456 0100.

“The coalition government is also consulting on the impact these changes could have, so we await the outcome of that with interest. It is important the definition of an empty home is correct, as we do not want to see people charged unjustly – especially as this could affect those in the military and we have a very large forces community in the county.”

The public consultation on the proposed council tax changes in Wiltshire is open until Tuesday, October 30.