Ministers have threatened to extend the council tax referendum system to larger parish and town councils.
The move sparked an angry reaction from the National Association of Local Councils, which said this would “damage communities and local services as well as undermining the role of local councillors”.
A Department for Communities & Local Government consultation paper on the 2017-18 local government finance settlement said parishes would be brought within the referendum rules if their Band D precept were higher than that of the lowest charging district council - £75.46 this year - and they had a total precept of at least £500,000.
The only exception would be where a higher tier responsibility had moved to a parish at an agreed “reasonable cost”.
In line with the principles introduced for districts in 2016-17, referendums would be triggered by proposals for increases greater than whichever is the higher of 2% or £5 precept increase.
The DCLG said it expected around 120 of 8,800 precepting parishes to be affected.
It said it made the proposal because average Band D parish precepts had risen by 6.1% this year, which it said was ”notably higher than those in the previous five years”.
It said: “We believe there is a strong argument in favour of extending referendums to those larger parishes whose precept is equivalent in size to that of a district council.”
Ministers warned they would consider extending the referendum requirement to all parishes in future .
NALC chair Ken Browse (Ind) said: “This really is a centralist sledgehammer to crack a nut, at a time when government should be supporting not undermining councillors and their important role in communities.
“This move, costing upwards of £1m, will seriously damage smaller communities’ ability to help themselves and threaten the government’s previous commitments to localism and devolution.”
Only one council tax referendum has been held, when Bedfordshire’s then police and crime commissioner Olly Martins (Lab) last year unsuccessfully sought a 15.8% increase in his precept.