At a meeting of full council on Wednesday, February 24, members voted through the tax increase, the lowest in Wales, alongside £11.1 million of cuts and savings.
Council leaders had originally warned of a tax hike of around 3.9% for next year, but a better than expected financial settlement from the Welsh Government meant the figure was lower.
The 1% increase equates to 19p extra per week for a Band D property.
Cllr Barbara Jones, Deputy Leader of Council, added: “The provisional Local Government settlement, announced at the end of last year, was much better than we expected with Caerphilly receiving a 0.9% reduction in funding for 2016/17.
“We have honoured the School Pledge and have set aside funding for anticipated cost pressures in social care. The School Pledge amounts to £1.9m per annum and a sum of £2.5m per annum has been committed to Social Services.”
The budget also included the contentious “sandwich tax” – a charge being made to schools to cover the cost of the council’s catering service to accomodate pupils taking sandwiches in for lunch.
The charge, which will bring in around £102,000 for the local authority, has been consistantly attacked by opposition Plaid Cymru councillors. It will come into effect from September this year.
Plaid Cymru group leader Cllr Colin Mann said: “The sandwich tax and the cut in school breakfast club hours should have been looked at again, especially when it impacts on staff earning very little. There are potentially 140 jobs under threat here.
“The strength of feeling against this tax from the public has been overwhelming since Plaid Cymru highlighted Labour plans.
“Labour has been able to pass on £1.3m to all schools as a result of a much better than expected financial settlement from Welsh Government. But it still intends to raid school budgets and take some of that back with a tax on primary schools averaging £2,200. This is money going out of schools into council coffers and it is not acceptable.
“We again call on Labour to scrap the sandwich tax, and meet the costs of setting up tables and clearing up after pupils have eaten, centrally. They should stop squeezing our primary schools.”
Labour has previously said that no jobs are under threat and that if schools do not pay the charge, then catering staff will have their hours reduced.
Caerphilly Council leader Cllr Keith Reynolds, said: “Thanks to prudent financial management, and a less severe cut in our settlement than expected from Welsh Government, our Labour-led Caerphilly Council has now agreed a 2016/17 budget that protects residents’ valued services, especially those for our most vulnerable residents.
“It was disappointing, though not surprising, that Plaid Cymru councillors failed to back our budget. But they were in disarray at the council meeting – many of their members failed to attend the meeting, and those who did were unable to come up with any valid amendment which could suggest a sensible alternative to Labour’s sensible proposals for savings which will not adversely affect our borough’s people.”