Future Hamilton rates increases will be aligned to the consumer price index (CPI) if mayoral candidate Angela O'Leary wins the 2019 elections.
However, current mayor Andrew King, who is seeking re-election, said the policy "lacks true understanding of the city finances".
"What the candidate is proposing is having a budget that runs our city down, cuts city services and the city's growth. This is a populist policy," Mr King told the Hamilton News.
The policy announcement is the latest in the so far four candidate race for the Hamilton mayoralty, contested by Ms O'Leary, Mr King, and councillors Paula Southgate and James Casson.
Ms O'Leary said Hamilton city council has been 'rating people into poverty' and it must stop.
"The people who can least afford it are the ones who are hit the hardest. This includes people on fixed incomes, young families and owner-operated businesses. This is especially true for superannuitants for whom the highest proportion of household expenses are rates."
"I have put a lot of thought into this, I am not capping rates to CPI but I just want to give residents some level of a benchmark."
The CPI is a measure of inflation for New Zealand households. It records changes in the price of goods and services.
However, Mr King said that Ms O'Leary's policy announcement is a populist one.
"This candidate has voted for rates rises every year including an 8 per cent increase with the previous council of 2013-16."
Councillor Angela O'Leary voted against the 9.7 per cent rates increase that was approved as part of the 2018 10-year plan.
"Now because it doesn't suit their campaign agenda, they voted against the latest rates increase and making an announcement that she has no track record to defend."
"Who's going to be the person who will turn the lights off in the city?"
Speaking to Hamilton News Ms O'Leary said she expected her opponent to call it a populist policy, however, said the council had rated its ratepayers too highly.
"People are struggling to pay their rates bill, and I've been questioning what is actually affordable to the residents because under the Local Government Act we have to have regard to that," Ms O'Leary said.
"The last financial report, the everyday measures are looking to a over $6 million surplus, which means this year we rated too high, and that is a concern.
"I want to align this to the cost of living, to try and find some way to measure for the residents what is affordable."
During the 2018 10-year plan, the council approved a rates increase of 9.7 per cent for the 2018-19 year, and a further 3.7 per cent increase each year after that.
Ms O'Leary said paying your rates is not a discretionary expense.
"It is a tax. And when we put rates up by amounts way in excess of the rate of inflation, it is a tax too far. If elected, I will make Hamilton an affordable city and adopt and develop innovative ways to fund the big, nice-to-do projects that keep the city moving forward."
While Council will always be responsible for infrastructure development and maintenance, developments in the city should be based on partnerships where everybody can benefit.
"According to the New Zealand Taxpayers Union, rates are rising across New Zealand at almost five times the rate of inflation," Ms O'Leary said.
Between 2014 and 2017, rates charged by local authorities rose by an average of 12.8 per cent while inflation was 2.6 per cent.
Nominations open on July 19, and polls close on October 12.