Households in Birmingham face a 21 per cent rise in council tax, adding £350 to average bills.
Labour-run Birmingham City Council – the largest in Europe – has asked Michael Gove for permission to increase charges by up to 10 per cent in April and up to 10 per cent the year after.
It comes just weeks after the council said it was effectively bankrupt as a result of an equal pay claim lodged by female workers.
Mr Gove, the Levelling-Up Secretary, is considering the request. If he agrees, the increases of 10 per cent each year for two financial years could add up to a potential 21 per cent overall increase by April 2025.
Such an increase would add £342 to the bill for a typical Band D property and £685 on the most expensive Band H homes.
Birmingham, which declared effective bankruptcy in September, will set out its final council tax plans next month.
John Cotton, the leader of the council, said no final decision had been taken. He said residents would only be asked for extra money if needed, and that could depend on what additional support was received from central Government.
Mr Cotton added: “We have asked for permission to raise council tax by more than 4.99 per cent, but we will not go beyond 10 per cent. We know that is still very tough for families across the city and we will do everything we can to protect the most vulnerable.
“We currently have a significant council tax support scheme in place, with approximately 115,000 households eligible for council tax support. Around 75,000 households pay no council tax. There will also be support via the discretionary hardship fund.”
A government source said: “The scale of Labour’s mismanagement in Birmingham is extraordinary. There are eye-watering levels of debt and wasteful spending. Inevitably, Labour will have to seek to hike taxes on local people to pay for their failings.
“This is a flashing red warning sign for what Labour government would do to the UK. More spending, more borrowing, more debt and higher taxes.”