A banner welcoming shoppers to Lewes precinct was condemned by councillors and traders.
They said the money would have been better spent on free parking to attract shoppers into Lewes in the run up to Christmas.
But Lewes District Council said it believed free parking discouraged the turnover of spaces traders relied on.
Town councillor Susan Murray said: “Lewes District Council seems to think that it is bestowing a wonderful gift upon the town of Lewes.
“What possible use can there be to a banner that encourages people who are already in Lewes, to come here to shop?”
The district council said it supported the initiatives and events that the Chambers of Commerce and the Town Councils within the district were using to promote high streets during the festive season. The council said the banners were commissioned to complement this and promote shopping across the district.
Leader councillor Rob Blackman said: “We have decided to promote our major shopping events through the use of banners to market these activities in all three towns.”
He added: “Our parking policies throughout the year support traders by offering reasonably priced, cashless parking, including free car parks on Sundays and Bank Holidays.”
President of Lewes Chamber of Commerce David Clark added: “Whilst the idea for the banner does, I am sure, come from the right place, the businesses within Lewes need and deserve more in the way of support.”
This year Lewes District Council gave no concessions to parking during the festive season, except an extra hour free on Late Night Shopping on Thursday December 4.
Lewes town councillor Stephen Catlin said: “The clue is in the title - ‘Late Night Shopping’. Parking charges stop at 5pm anyway, so stopping the charges at 4pm does not help the event at all.”