THE council tax rise which has seen York put at risk of capping by the Government should remain in place, the city's resources chief said today.

Coun Quentin Macdonald said City of York Council should be allowed to keep its 5.49 per cent tax increase for 2006/07 - despite the local government minister Phil Woolas branding it "excessive".

"Labour has set a new low in the credibility stakes by picking on City of York Council as a target for council tax capping," Coun Macdonald said.

"We are proposing 5.49 per cent this year, and had already planned for 4.5 per cent next year.

"I hope that Government will agree to this plan, to save us the enormous expense of rebilling and deliver an average of no more than five per cent over the next two years."

The Evening Press reported on Tuesday how Mr Woolas had attacked the council's budget and tax plans and put it at risk of capping.

If the council fails to satisfy the Government, finance chiefs risk having their hands tied - either by Whitehall setting a maximum budget for the authority, or restricting future budget increases. At worst, council tax bills may have to be sent out again.

Council leader Steve Galloway, who has branded the decision "perverse", said the Government's demands could mean more job losses and savings in an authority which has already made £5 million in efficiency cuts and shed as many as 100 posts.

"We had already proposed a 4.5 per cent council tax rise for 2007/08 in the Budget papers debated by full council, so the Minister can be in no doubt of our intention to meet his declared aims," Coun Macdonald said.

"For the first time ever we have been told the Government grant for two years during the budget process. We could see that 2006/07 was very difficult but that 2007/08 might be a little easier.

"Accordingly we proposed to have a higher increase the first year and a lower one the following year as indicated in the budget papers to council.

"York residents will be badly let down by the Government if it carries out its threat because we have planned carefully in order to protect local services.

"We will deliver five per cent over two years, but not in each individual year.

"This is clearly in line with the Government's intention to keep council tax low."

Updated: 12:13 Thursday, March 30, 2006