The Inquiry's main objective was to investigate possible revenue streams that could be raised locally, to help local councils free themselves from the tyranny of central government funding. At the time local government revenue came from Council Tax, Business Rates (though the level was set by central government, not local authorities themselves), licence and other fees (eg to open a tattoo parlour, or register a death), small fines (dog mess and other litter) and car parking charges. Altogether the revenue raised covered less than 10% (I think) of all local government spending. The rest of the money was supplied by central Government - making the UK one of the most centralised states in the world.
A "couple of pennies on income tax" would've made the situation worse - though one of the things the Inquiry looked at was the possibility of localising (some) income tax.
Its a shame the inquiry didn't recommend formula funding from central government receipts (couple of pennies on income tax?) - so much grief could have been saved.