Rates in Douglas are to rise by 3.2%, to 385 pence in the pound.
The announcement was made at a public meeting by council leader David Christian.
He emphasied that times were tough economically but said reserves would be used to continue investment in the town.
He told Manx Radio:
"We are in very uncertain times at the moment, and nobody really knows what's happening from one day to the next.
"It was never possible to have a stand-still rate on the grounds that, in the same way the general public are losing interest on their savings, the council is having a considerable sum lost in relation to its savings, because the interest rate now is so low.
"Also we have, put upon us, a wage increase for all our staff, which is running at 3%, so when you look at those two alone that is a considerable increase in the rate."
A year ago the recommended rise was 3.9%, to 373 pence in the pound.
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