First the good news. After much hype, speculation and rummaging through reams of accounts, this year's Oxfordshire County Council tax rise has been set at 4.5 per cent -- less than the six per cent originally feared.

Now for the bad news. Next month -- and for the first time since 1991 -- every domestic house across the country is set to be revalued, and that could spell disaster for homeowners in Oxfordshire.

County council finance chiefs have estimated that many houses will jump council tax bands and be forced to pay higher bills.

Some householders could see a 24 per cent hike in their council tax bills while County Hall fears the annual grant they receive from the Government could be cut by £13m.

Tory county council leader Keith Mitchell said: "The issue of council tax revaluation is a very serious one for the whole of the South East.

"At the moment the indications are that this part of the country will suffer far more than the north under revaluation. This is simply because property prices are so much higher here.

"At the moment we are only guessing what could happen. However, we are watching this issue very carefully indeed and are ready to defend robustly the interests of Oxfordshire council taxpayers if a future Government changes the system to the detriment of people who live here."

By 2007, the average Oxford household could see an extra £318 on their bill, bumping it to more than £1,600.

In the past decade the county's council tax rate has doubled.

Council tax bills are actually four bills rolled into one with the amount paid shared between the four providers of local services -- the county council, which is responsible for the lion's share of services including waste management, roads, social services and schools; district councils, like Oxford City Council, which are responsible for housing, benefit payments, recycling and recreation; Thames Valley Police Authority; and town or parish councils.

But debate still rumbles on about whether council tax, which replaced the poll tax in 1993, is the fairest system of charging local residents for the amenities they receive.

The Local Government Association, which represents local authorities, wants councils to be able to raise a greater proportion of their income themselves, rather than depend on the annual Government handouts.

One criticism is that under the present council tax system, taxpayers find it difficult to see any clear connection between local taxes and local spending decisions -- and that council tax is unrelated to income.

Pensioners and those on fixed incomes are likely to suffer with any increase in tax. Last year, OAPs led non-payment campaigns across the country after bills jumped an average 13 per cent nationwide.

The average Band D household in Oxford now pays more than £1,300.

Oxfordshire County Council is keen to see more local control of tax after it was revealed the contribution business has made towards local services has fallen from about 29 to 22 per cent over the past decade.

Last month, county councillors could have opted for a budget tabled by the Labour group that proposed a 3.18 per cent council tax increase, but it was defeated by the Tory-Lib Dem alliance.

Mr Mitchell added: "We have not set a council tax with an election in mind. It's fair on taxpayers, it supports key services and it's sustainable into the future.

"We have looked carefully at all of our budgets and some areas of the county council have not received as much money as they would have wished or as we would have liked to have given them.

"But we have a responsibility to the council taxpayer to provide value for money and that is what we have striven to do."

The words 'council tax' may be greeted with a heavy sigh by many people, but it is essential for authorities to provide the services we all take for granted like schools, care for the elderly, fire and rescue service, roads maintenance and rubbish collection.

But will homeowners still think they get value for money after the mass revaluation?

Richard Lee, a senior negotiator with Oxford-based estate agents Cluttons, said: "The main point here really seems to be that we happen to live in a county where house prices are way above the national average and people will be have to put up with an increase regardless of whether they can afford it or not. Just because house values are high in Oxfordshire it doesn't follow that people have more income.

"Recent first-time buyers may well be hardest hit, as they have probably had to borrow above normal income multiples to buy a modest-sized property. Any additional burden will make things very difficult."