Coun Tony Williams warned the move would only add “to the misery and desperation of some of the most vulnerable people in Blackpool.”
The increase means people living in average band D properties will see their bills rise by £97 to £1,997 from April.
Coun Tony Williams also warned the council’s stake in the retail sector looked uncertain following the demise of Debenhams inside the town hall-owned Houndshill, while the loss of annual dividends such as £1m from Blackpool Transport “could have an impact on budgets.”
But council leader Coun Lynn Williams said the Government was failing to support local authority spending leaving “no choice” but to increase council tax by the highest percentage allowed.
She said: “Any decision to do otherwise would means cuts to our services and we’re not prepared to do that.”
She said the compound effect of 10 years of government cuts had seen “£1.2bn taken from the people of Blackpool since 2010/11”.
Coun Lynn Williams said despite one of the most challenging years in history the council had produced a budget which protected services and enabled investment in key regeneration projects.
She said: “Our strong financial management means despite challenges we are not one of the dozen councils of all political colours that are in emergency talks with the Government to avoid bankruptcy, and across the country budget crises are the norm.”
Measures included strategies to help the council’s wholly owned companies recover from the impact of lockdown and investment in projects including the second phase of Houndshill.
The council approved spending on services of £149m, with savings of £20m and an extra £10m investment in adult and social services.
The impact of the Covid pandemic has left the council £2.5m out of pocket, but that sum has been mitigated by government grants and the council’s own reserves.
Council tax bills for 2021/22 with last year’s figure in brackets: Band A £1,331 (£1,267); Band B £1,553 (£1,478); Band C £1,775 (£1,689); Band D £1,997 (£1,900); Band E £2,441 (£2,323); Band F £2,885 (£2,745); Band G £3,329 (£3,167); Band H £3,995 (£3,801).
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