The deputy leader of Oxford City Council has defended the authority after it was revealed it was owed £1.3m of council tax from 2009-2010.
Ed Turner said it was harder for city councils to keep track of residents as they tended to move house more often.
The Labour-led authority also said its collection rate was improving.
A Freedom of Information request by the BBC found that local authorities in England, Scotland and Wales failed to collect £530m during 2009-2010.
Mr Turner said: "We are an extremely tough council. We go after people very, very hard if they haven't paid their council tax.
"We take people to court, we use debt collection agencies, we use tracing agencies when we can, but in fact this year our collection rate is going to be the highest it has ever been at over 97%."
He added: "In an urban area like Oxford you've got quite a transient population but we do try and track people down and we often succeed.
"We are desperate to collect every penny that is owed to us because every penny that goes away is a penny that is not being spent on public services."
Tony Travers of the London School of Economics said: "Urban authorities generally do find it more difficult. There's a large population moving in and out all the time.
"At the last census it proved difficult for the Office for National Statistics even to find all the households in some local authorities so it is hardly surprising that councils also have the same problem."
Glasgow and Birmingham had the highest amount of unpaid council tax for 2009-2010 at £17m and £14.7m respectively.
Oxford City Council needs to cut its spending by £9m in the next four years.