Amsterdam is planning to increase local property taxes this year by around 25% to offset a downturn in government and pay for essential services .

The hike will take the average payment from €313 to €399 per year, city officials say although the confirmed percentage will only be published in December. The tax, known as OZB, is used by councils to generate funding for local services and is only paid by home owners.

City finance chief Hester van Buren said the decision to increase OZB by so much had “not been taken lightly” but is necessary. Waste disposal tax – currently €469 for a multi-person household – is being frozen for the coming two years, Van Buren said.

Extra funding is being earmarked for youth social services, the switch to cleaner energy sources and dealing with litter, among other things.

Opposition councillors have accused the city of using home owners as a “cashpoint machine” and not doing enough for “hardworking Amsterdammers”. D66, which is a member of the city’s ruling coalition, said the measure would hit middle class Amsterdammers hardest.

“You cannot ask more from people who have their own home because many of them have average incomes,” local party leader Rob Hofland said. “This might the beginning for my left wing colleagues but for D66, this is as far as it goes.”