The islands' council says the rise will help recruit and retain staff
A row has broken out on the Isles of Scilly after a decision to pay senior council officers 18% more.
The island's policy and resources committee voted five to four in favour of a 12% salary increase, plus a further 6% "supplementary" rise.
Chris Thomas, a councillor in St Mary's, described it as "absolute madness" and has resigned his seat.
But the chairman of the Council for the Isles of Scilly insists the increase is necessary.
Julia Day denied the supplementary increase was similar to a London weighting allowance.
"It's not a Scilly weighting and it's not an allowance for living on the Isles of Scilly," she told BBC News.
"We have made a 12% pay increase, which is still substantially below what is necessary to bring it up to the full rate.
"The supplementary payment, which is non-pensionable, is there to try to get us that little bit closer to the mainland rate in order to ease our recruitment and retention problems."
In Cornwall, the council faces having to save £100m over the next five years and other local government services across the UK are also facing substantial budget cuts.
Mr Thomas said: "Bearing in mind the country's in a bit of a predicament at the moment and for the council officers to negotiate such a high wage in this time of austerity is absurd"
"The are among the highest paid people in the Isles of Scilly and other people make ends meet.
"It's a wonderful place and I think its a privilege to actually live there, so to have to be subsidised to live there is absolute madness."