The city council has set its budget for the next financial year amid calls for greater economic freedom from Westminster.

Canterbury's local authority opted for a 1.99% raise - the maximum increase possible without triggering a referendum.

Average band D properties will be charged an extra penny a day, bringing the local authority’s share of their council tax bill to £189.

Leader John Gilbey pointed out that Canterbury’s authority collects around £50million in business rates which it sends to central government – only to receive £4million back.

With support grants for local governments steadily decreasing, the city council faced increasing pressure to cut services further, said Mr Gilbey.

“Surely it is logical for us to retain more of these taxes directly to replace our disappearing Revenue Support Grant,” he said.

"In the interests of localism, if retention was higher then some service cuts ahead could be avoided.”

The city approved its 2015/16 budget, which stands at nearly £20 million, at a meeting in the Guildhall.

It agreed to raise its portion of the council tax by 1.99% - the highest figure allowable without calling a referendum.

The raise equates to an extra 1p per day for an average band D property, which will now pay £189 per year for city council services.

Speaking at Thursday’s full council meeting, Mr Gilbey said: "Government promised greater fiscal independence, which has to be to the right government level.

"From long personal involvement in this we have to seriously look at the potential to become financially independent from Westminster.

"If anyone can do it, Canterbury can."

With central government funding forecasted to keep falling in coming years, Canterbury City Council is continuing to prune spending in numerous areas, including direct grants to voluntary groups.

Cllr Alex Perkins, the leader of the 10-member Liberal Democrat group, made an attack on the cuts to voluntary groups the cornerstone of his budget speech.

Urging the authority not to proceed with a £30,000 reduction, he said: "This is the cruellest cut, the emergency blanket, the safety net.

“These are services which cannot survive unless they have that core element of funding."

The Lib Dems proposed six amendments to the budget. They suggested a 10% reduction to councillors' expenses and allowances, restoring money cut from voluntary groups, setting up a hotline for people to report anti-social behaviour, providing extra funding for rural parishes, imposing a 10% reduction to pest control charges.

Finally, there should be no increase in charges for collection of large household items for disposal, said the Lib Dem

They said these amendments would cost the council £76,000 - money it could take from its reserves of £12.3 million.

Cllr Perkins added: "This is not a poor council. We can afford to properly fund these services."

However, Cllr Peter Lee, the council's finance supremo, said money held in reserves was vital for the years ahead when yet more money will be cut from its budget by Westminster,

Cllr Alan Baldock, the council's sole Labour member, sided with the Lib Dems over the issue of cuts to voluntary grants.

He said: "The cuts were a massive blow to places like the Northgate Ward Community Centre.

"The insurance for the minibus ran out last week and now it's just sitting there parked up.

"These grants are so important and every single one makes it more difficult for the people in the community. I'm asking you from my heart to do the right thing and allow the community to get the help it needs."

Each of the six amendments tabled by the opposition was defeated by the Conservative group, which has 34 members.

The council also agreed to allow Kent County Cricket Club to defer repayment of a £1.5million loan made to it in March 2012.