Dozens of small business owners in Largs, North Ayrshire, are unhappy about having to contribute to the new regeneration fund as they claim a vote to create it was flawed.
They say many people did not received ballot papers for the poll on the Business Improvement District (BID), and undue pressure was placed on them to vote for it.
Some shopkeepers are boycotting others in the town, with traders only visiting other shops where the owner agreed with their views.
Supporters say the fund will help revitalise the town, but opponents argue they are being asked to pick up the tab for services traditionally provided by the council.
They have now asked the Scottish Government to intervene over the five-year scheme.
Marie Harris, who helps run Duo Weddings and Balloons, said the shop was one of many who did not receive a ballot.
She said: "The whole thing is totally flawed – it's a con. We're going to be forced into paying for something that councils used to pay for – Christmas lights, hanging baskets in the main street. We're supposed to be a democracy, not a banana republic. The whole thing stinks to high heaven."
Largs is the 17th town in Scotland to create a BID since the idea, originally developed in Canada, was launched by the Scottish Government in 2007.
Charity shops, newsagents, hairdressers and other businesses will pay hundreds of pounds a year into the fund from next March. The cost will be in the thousands for major organisations including care homes and supermarkets.
Businesses that cannot pay or refuse to face having stock and cash seized by sheriff's officers.
The fees – which are expected to generate £120,000 a year for the town – will be pooled and spent by the Largs BID steering group, a 12-member body made up mostly of local business owners and councillors.
Of 280 businesses eligible to vote, 140 did so. Ninety-six (66%) voted in favour. Balloting was organised by North Ayrshire Council.
Another critic of the vote is Sarah Morgan, owner of beauty salon Be Glamazing. She said neither she nor her business partner, who runs a hairdressers, got a ballot form, and she felt intimidated and under pressure to vote yes.
She added: "I don't think the BID is necessarily a bad thing and it's not about the money – it's the fact we didn't get the chance to vote. It's splitting the town. Everyone knows everyone else and now people are refusing to go into each other's businesses because 'they voted no' or 'they voted yes'. It's just awful."
But Peter Valerio, who owns Largs Hardware and chairs the steering group, rubbished the claims, calling those behind them a minority. He believes traders simply lost or threw away ballot papers by mistake.
He said: "From what I can gather, it's two or three people. Nobody has been coming into my store screaming and shouting that they hadn't received voting papers.
"There is absolutely no evidence of [harassment] in any way, shape or form. That is very unfair. If anything, I know of two people who felt intimidated into signing the objections form by the people who are against the BID. But not one single person has come to me as chairman and said 'I felt pressured into voting'."
A spokesman for North Ayrshire council said: "The BID voting system follows Scottish Government regulations which must be followed during the voting process.
"The ballot was open to all non-domestic ratepayers operating within the BID area. Information was sent to every eligible voter in the BID area, outlining the process and operation should the vote favour the introduction of the scheme."
A Scottish Government spokeswoman added: "A com-plaint concerning the ballot process for Largs Business Improvement District has been received.
"A ballot about establishing a BID can only be declared void if there has been a contravention of the requirements set out in legislation to the extent that it is likely that voting has been significantly affected. The complaint is being considered and a reply will be issued shortly."