Cllr Victor Pierce-Jones said handing power to a group of just 20 people could be disastrous for Hayling and could mean tax hikes up to £40 a year for residents.
But Paul Fisher, the chairman of Hayling Island Residents' Association, said it was absurd to compare Hayling with Zimbabwe, where Robert Mugabe's tyrannical rule has produced widespread human rights abuses.
He said: That it an outrageous statement to make which he cannot possibly justify. Some councillors see this as a threat.'
Under the plan, up to 20 councillors would be elected.
The island community would still be presided over by Havant Borough Council, but more responsibilities, such as parks, recreation and planning, could be transferred to the town council.
Cllr Pierce-Jones, who is also the ward representative for Hayling West, said: 'It would turn Hayling into the Zimbabwe of the south coast. It could put people in power who have no experience. You need the infrastructure and resources in local councils these days. It's no good just putting people in a room and talking about it and expecting to get things done.'
Supporters of the town council are considering setting up a petition demanding the island gets its own authority.
The residents' association says a town council would give local people a bigger say on planning, events and tourism.
But it needs the support of at least 10 per cent of the electorate for a town council, which would be able to levy a precept of around £40 a year.
Mr Fisher said: 'Services provided by the borough council would be taken over and provided more inexpensively. We are currently just an off-shoot of Havant. We are a separate community with no representation.'