TWEED Shire Council will impose higher rates and charges to offset the impact of the Federal Government's carbon tax on its budget.
But Federal Richmond MP Justine Elliot says government compensation will outweigh the costs of carbon pricing in nine out of every 10 households.
The council's draft budget reveals the carbon tax will cost more than $861,000 next financial year.
Tweed Shire Council's director of technology and corporate services Troy Green said the cost of the tax and the State Government's waste levy would increase general rates to 8.36% including water, sewerage and garbage charges.
That's about an 0.8% increase this year.
Mr Green said rates could only be increased to include the carbon tax by 0.4% ($200,000), leaving a shortfall of $661,000.
"That is a large amount for our budget," Mr Green said.
"We will need to reduce services in other areas and increase prices in water and sewerage."
He said everyone with a bin would have charges increased by $26.70 to cover the waste levy.
"We have absorbed the (waste levy) cost for the past two years and we just can't do it any more," he said.
"The State Government is reviewing the levy but we can't absorb any more of the cost."
Councillor Warren Polglase said the higher rates were because of charges not envisaged in the seven-year plan.
The administrators who took over from council when it was sacked, developed the seven-year plan to increase the level of infrastructure spending in the Tweed.
It will expire at the end of the next financial year.
The plan set a rates increase of 7.5% next financial year.
"We have now been hit with a carbon tax and an environmental levy which is well over a million dollars," Cr Polglase said.
"Overall, there is a lower valuation on land in the Tweed and the rates are quite in excess of where they should be.
"I would like to see council to do away with some of the environment services."
Richmond MP Justine Elliot said the Independent Pricing and Regulatory Tribunal (IPART) recommendation translated to about a $3.30 annual increase in household rates in 2012-13, as a result of the carbon price.
She said nine out of 10 households would get assistance that equalled their expected overall costs resulting from the carbon tax.
"IPART also suggests Federal Treasury modelling may overstate the impact of the carbon price on the cost of living.
"IPART pointed out there are several programs available to councils to fund various energy efficiency and other measures."
Mrs Elliot said the $200 million Community Energy Efficiency Program would allow councils to apply for grants to undertake energy efficiency upgrades, which would lower potential impacts of the carbon price.