Brighton and Hove residents could hold the key to deciding how much tax they pay next year.

Brighton and Hove City Council’s ruling Green administration is drawing up plans for a 3.5% rise in council tax next year.

But its plans were dealt a fresh blow yesterday after the Government announced any rise of more than 2% would automatically trigger a referendum.

It means the minority administration would first have to persuade opposition groups to agree to a rise and then would have to ask residents to ratify it.

If locals rejected the rise the council would be forced to scrap its plans and set a budget based on a maximum tax rise of 2%.

The move was announced by Chancellor of the Exchequer George Osborne who said he wanted to freeze council tax for the third year in a row.

He said councils would be given additional grants equivalent to them setting a rates rise of 1% if they agreed not to increase tax.

Last year Green plans to increase council tax were defeated when Labour and Conservative councillors voted together against them.

An Argus referendum in January revealed 68% of readers were against the increase.

Council leader Jason Kitcat said he was keen for history not to repeat itself but wanted to stick by his party’s plans for a tax increase.

He said: “We will look at whatever comes out of government next week.

“If it is the same deal as last year I would be very unlikely to support it.

“My aim is to try to find some sort of cross party consensus on the budget. We want to deliver services and so I hope we could find some common ground. If not we will go to a vote and see how that goes.”

Were there to be a referendum, the cost of which would likely run into the tens of thousands of pounds, it would be organised by the council and voters would be given at least 28 days to decide.

In the interim the tax rate would increase but if voters rejected the proposals the money would be credited back onto their bills.

Coun Kitcat can rule out any support from Conservative group leader Geoffrey Theobald, who maintained his stance for a freeze.

He said: “I have always said there should be a council tax freeze. Residents should not have it inflicted upon them. No doubt Mr Kitcat will try again though. If there is a referendum we will not support the rise and Argus readers and the city’s residents will say no to it.”

But Labour group leader Councillor Gill Mitchell was more measured in her response.

She said: “We will wait to see if there will be a council tax freeze grant offered which is not clear at the moment. We want to protect people’s budgets as far as possible.”

Hove MP Mike Weatherley supported the idea of a referendum, something he pushed for last year.

He said: “The Green Party needs to explain why it wants the rise and it is right we ask the people on something so important as council tax and money.”