Householders in part of Lincolnshire who remove microchips from their wheelie bins are being warned they will not have their rubbish collected.
South Kesteven District Council is using the bins to monitor how much people are recycling, with potential rewards for those who recycle well.
But one protester claims they will eventually be used to charge people for the amount they throw away.
The local authority insisted this was not the case.
Protester Brynley Heaven, who lives near Bourne, said: "The problem with pay-per- throw, or paying by weight of rubbish collected is that the growing-up family chucking out soiled nappies and all the rest of it would pay more.
"The single executive who eats in restaurants and doesn't spend much time at home would pay less - and that can't be right."
But Dawn Temple, of South Kesteven District Council, said there was nothing to be concerned about.
She said: "At the moment there's no legislation in place for us to introduce the pay-by-weight system. So that isn't something that we're introducing the tag for."
Ms Temple added: "For anyone who removes their tags, our lifting equipment is set so that it will not lift untagged bins.
"We will be issuing notices out to residents of the district to specify that the containers must have the tags in them for us to make that collection."