Earlier this month, the local authority raised the prospect of increasing council tax by 1.97% in April, or around £25 a year for an average household.
But if the authority wanted to increase the levy by 2% or more it would be forced to put the proposal to a public vote.
By opting against freezing council tax, Cornwall Council will reject a Whitehall hand-out equivalent to a 1% increase.
Given the scale of spending cuts issued by central government, Tory council leader Jim Currie argues raising the tax is the "only option" to protect frontline services.
But Conservative Local Government Minister Brandon Lewis said: "Every local resident will be dismayed by this flagrant democracy-dodging.
"Cornwall Council is doing hard-working families and pensioners a real disservice by raising their council tax to a hair's breadth below the trigger level in order to avoid a public vote instead of taking up this Government's offer to help fund a freeze for the third year in a row."
Alex Folkes, deputy leader of the council's Liberal Democrat group, said: "Whatever your position on the right balance between council tax and frontline services, what is clear is that it should be a decision taken by Cornwall councillors in Cornwall. Yet again, Tory ministers are at war with a Tory council."
Councillors will vote on the plans next month.
