Falmouth Town Council may have to hold a referendum if it wishes to raise its council tax precept next year, according to the chair of the town’s Finance and General Purposes.

Councillor Candy Atherton said Eric Pickles, the Secretary of State for Communities and Local Government, has shown his intention to extend current legislation, which caps local authority tax rises at two per cent unless approved by a referendum, to town and parish councils.

She said: “Falmouth is not currently rate capped and doesn’t have to go to a full referendum like Cornwall Council to increase council tax. It’s a much smaller rate than Cornwall Council.

“But the minister has indicated his intent to put a tax cap on town and parish councils next year.

“If you want to go over two per cent you have to go to a full referendum.”

She added: “We may well face a referendum, so we will face the expenses of putting together two budgets: one with the referendum and one without, it will be cleared up around Christmas or maybe November.”

“We’re not planning to put the tax up, we just don’t want the situation being that we can’t.”

The council tax precept is set by the town council each year but collected by the local authority, in this case Cornwall Council, which goes to services run directly by the town. Cornwall council is currently looking to make £196 million of cuts, meaning such funding is vital at a time when town and parish councils may have to take on the running of services which could otherwise be closed.

Councillor Atherton said: “Last year, when we did increase council tax by £22 or £23 per year for a band D property, we only had one letter of complaint.

“They understood that we were paying for toilets, for the shuttle bus, for this, that and the other.

“The town is having to take on more responsibilities and we don’t want to have to do it with one hand tied behind our backs.

“Next year we’re hoping to have a team that we bring in house, not contracting services to Cormac. So in summer they can work on toilets but in the winter can work on maintaining roundabouts and that sort of thing. We don’t want to put council tax up but we don’t want to be in the position that we’ve got the roof falling down.