Homes worth over £2.5 million could see a rise in their council tax bill if Sir Michael’s recommendations are put into action.
He explained that a reform would not mean and overall rise in the amount of tax paid, but would help to make council tax fairer.
His review suggests that in the future ministers should consider ear-marking a fixed proportion of income tax to local authorities.
Other recommendations include introducing a new power to levy a supplementary business rate, relax Whitehall controls on council spending and permit authorities to charge for domestic waste.
However, he said these were issues for the longer term and such reforms would need "greater public support and understanding than currently exists".
Sir Michael said: "The issues for this Government to concentrate on are that council tax is a workable tax if you can take the pressure off it and if you can deal with issues of perceived fairness, and that's particularly the needs of the elderly.
"There are some changes to be made immediately, particularly to deal with the needs of pensioners, who I think are bearing too heavy a burden under council tax."
Earlier this week Community Secretary Ruth Kelly ruled out any reforms during this Parliament.
