Homeowners in Northern Ireland are facing an increase of more than £1 a week in the average rates bill under the government's local spending plans.
Homeowners face a sharp hike in their rates bills
The regional rate element of the bill, which is set by central government, will rise by 19% next year.
When combined with the rate set by local councils, this means a likely rise of about 12-13% for ratepayers.
Northern Ireland Secretary Peter Hain said the increases were necessary to pay for essential public services.
Mr Hain said income from domestic rates was "only half the equivalent figure in Great Britain".
Domestic rates bills will increase in 2006 to raise an additional £20m for public services for each of the next two years.
Rates will also increase by 6% in the year 2007-08 as the government introduces water charges.
Speaking at Belfast's Science Park, Mr Hain said Northern Ireland needed to "bridge the gap" between what ratepayers in the province pay compared to council tax bills in England.
"Income from domestic rates in Northern Ireland is only half the equivalent figure in Great Britain," he pointed out.
He added that the £20m raised would fund priority packages for children and young people, science and skills and the environment and energy.
"While this is a large percentage increase, the amount householders contribute to local public services here will still be much less than 60% of the average for England," Mr Hain said.
He warned that the gap would need to be revisited in the future to maintain local public services at the same level as elsewhere.
The government has earmarked £16bn for total public spending by 2008.
Mr Hain identified three priority areas for funding:
- Children: £25m in each of the next two years for children's care, health and education facilities
- Youth: £15m next year and £20m the year after to tackle unemployment among young people and promote skills training
- Environment: £50m over two years for research and development of renewable forms of energy.
He also said expenditure on health would rise by £450m by 2007/2008, a 13% increase on this year.
The money should ensure that targets for waiting list reductions can be met, cardiac, cancer and dialysis services can be enhanced and more elderly people will be able to live safely in the community, he said.
"There will be additional funds for suicide prevention and help for those who wish to stop smoking as a result of our plans to ban smoking in enclosed public places," Mr Hain added.
The Northern Ireland Secretary also announced an increase in spending on education of £100m by 2007/2008.
However, he said there was a need to tackle the problems of duplication and overcapacity in the system.
Seamus Close, Alliance Party, called the increases "grossly unfair".
He said average earnings in Northern Ireland were £100 below those in Great Britain and people still paid more for basic necessities like food and fuel.
Former Stormont health minister Bairbre de Brun, Sinn Fein, called for a special peace dividend to be allocated to Northern Ireland to tackle decades of infrastructural neglect.
"It is time that the British government recognised their responsibility to address the impact of conflict and of under-funding by successive British administrations," she said.
SDLP assembly member John Dallat said there was no justification for such a rise in rates.
"The secretary of state's comparisons with England and Wales can have little relevance when they operate on a totally different local taxation system and the whole structure of their cost of living is different from ours," he said.
Shadow Northern Ireland Secretary David Lidington complained about the manner in which details of the budget were announced.
Mr Lidington said that the announcement was made by the secretary of state in a press conference in Belfast without a written statement being made in the House of Commons.
DUP deputy leader Peter Robinson said it was the highest ever rates rise, and yet Northern Ireland MPs had received "no information on the matter - other than what they could draw down from the BBC's website".
Ulster Unionist Esmond Birnie said: "This is too sudden a tax hike; a real triple whammy.
"The Labour government are savagely punishing those who have saved to buy their homes."
The Federation of Small Businesses has welcomed the emphasis on investment in skills but is disappointed that more practical help has not been given to the local business sector.
"The NIO could have signalled in this budget when they are to introduce the small business rates relief scheme which is already in operation in many other parts of the UK?" Wilfred Mitchell, FSB policy chairman said.
Older people will be pushed further into poverty by the rates rise, a Northern Ireland charity has said.
Duane Farrell from Help the Aged said the government had made a commitment to eradicate pensioner poverty. "These proposed rate increases are a huge backtrack on that commitment," he said.