When D.C. Mayor Marion Barry and members of the D.C. Council concluded their tax increase debate late last week, both sides pronounced themselves pleased with the result -- the elimination of a proposed income tax increase.

But the compromise everyone is celebrating is still most likely to drive up the cost of living for some District residents.

The latest version of Barry's proposed supplemental budget calls for a $20 million increase in the gross receipts tax on long-distance telephone carriers. Part of the cost of the tax is likely to be passed on to telephone users.

Defenders of the agreement reached between the mayor and council members say that the increase, up from an $11 million increase originally proposed by Barry, is aimed chiefly at corporate users and individuals who use long-distance heavily.

"If you don't have a big long-distance bill, it's not a big question," said council member John Wilson {D-Ward 2}, who chairs the council's Finance and Revenue Committee.

But long-distance carriers such as AT&T are displeased about the proposal to further sharpen their corporate tax bite. A gross receipts tax on utilities is disciminatory, they argue, because deregulation has opened the telecommunications business to corporations not considered public utitities.

"Across the country in other jurisdictions AT&T . . . since divestiture {has} been pleading with state legislatures . . . to remove the gross receipts tax on long-distance business, because long-distance business is no longer a monopoly, and AT&T is no longer a utility," said Herb Linnen, an AT&T spokesman.

AT&T is the largest long-distance phone carrier operating in the District, providing as much as two-thirds of the long-distance phone service in the city.

Long-distance carriers said they would prefer governments to impose a sales tax on their businesses that would apply to competing telecommunications companies that are not currently subject to the gross receipts tax.

Suzanne Crowell, a spokeswoman for the Office of the D.C. People's Counsel, said the gross receipts tax is less likely to be passed on to phone users because competing companies are battling to win customers by providing low-cost service.

Council members who hailed the compromise -- devised by Barry, Council Chairman David A. Clarke and Wilson -- said that the the telecommunications tax increase is not regressive because it would have greatest impact on high-volume long-distance users such as the federal government and large corporations.

The compromise plan to increase the gross receipts tax and eliminate the mayor's proposed $17.9 million income tax rise came after council committees, looking for ways to shrink the 1987 budget, proposed $13.7 million in reductions for a wide range of government agencies -- a severe assault on Barry's $82.3 million supplemental budget.

Some council members had said that they were prepared to slash $10 million from the city's Tenant Assistance Program, money that council members complained goes unspent.

Faced with that prospect, Barry withdrew his original supplemental budget proposal, made a few more budget cuts of his own and embraced Wilson's plan for a steeper increase in the telecommunications levy.

Although the tax would be imposed across the board, council members said yesterday that they do not think it will tax poorer citizens disproportionately.

"I don't think it will affect the public as adversely if we had imposed a direct income tax increase or a real estate tax increase," said council member H.R. Crawford (D-Ward 7).

The poorest residents, Crawford said, probably will not be affected at all. "The telephone in many areas of our district is becoming a luxury," he said.

Council member Hilda H.M. Mason (Statehood-At Large), whose committee proposed reducing spending by cutting the school budget by $1.5 million, said, "You can use the word regressive if you wish, but I think it's fair."

Barry's latest proposal restores the proposed $1.5 million school reduction as well as a $2.6 million that the council had reduced from the amount earmarked for energy spending.