Local Administrative Organisations (LAOs) have cried foul over a huge budget shortfall which may force them to lay off staff and cut funding for welfare projects.
Several LAO leaders have admitted their orgnaisations were now "broke" because the government has repeatedly postponed enforcing a new buildings and land tax, and revenue from value-added tax (VAT) has plummeted.
The buildings and land tax is suppose to be collected by the LAOs which are also supposed to receive a share of value-added tax revenue.
However, because of a sharp drop in consumer spending due to the Covid-19 pandemic, VAT collection has fallen below target.
This week, an LAO source said LAOs were sent a letter from the Interior Ministry labelled "most urgent" informing them that the deadline for people to pay their buildings and land tax in Bangkok will be deferred yet again from the end of last month to the end next month.
Payment deadlines will also vary for other LAOs outside of Bangkok.
In addition to deferring payment deadlines, a whopping 90% discount has been offered on the tax, which went into effect in the last fiscal year.
The discount was to help offset financial hardship felt by people from the Covid-19 crisis.
But the delayed enforcement of the tax and the discount have cut deep into the pockets of many LAOs.
The source said many are struggling and some have had to delve into cash reserves to sustain their operations and finance welfare and developmental projects such as school milk programmes.
The source said LAOs have predicted the severe budget constraints will continue well into next year.
The organisations have appealed to Interior Minister Anupong Paojinda for financial assistance.
They urged Gen Anupong to disburse emergency funds to make up for the shortfall in taxes, adding the funds could be drawn from the government's central budget.
Some LAOs are in such dire straits they have mulled the retrenchment of staff and considered delaying recruitment drives for next year.
Veerasak Hadda, president of the LAO Association of Thailand, aired the group's grievances at Government House yesterday.
He met Suporn Atthawong, the assistant PM's office minister, and filed a formal request for urgent financial aid.
Sukarno Matha, a Prachachat Party MP for Yala and head of the House Committee on power distribution and LAOs, said his panel has been told by the League of Southern LAOs that their coffers were running dry.
He said the problem is affecting LAOs nationwide and the main culprit was the delay in implementing the buildings and land tax.
"The tax was supposed to have been paid by the end of April.
"However, the Interior Ministry kept putting it off until the end of last month and now the deadline has been moved again to the end of next month," he said.
The MP said it looks likely few LAOs will earn any revenue from the tax during this fiscal year which ends this month.
He also said the Covid-19 pandemic prompted months of lockdown around the country triggering protracted economic stagnation.
The taxes the government managed to gather last month was only half the amount that it gathered in the same period last year.
It means much less money is being redistributed by the government to the LAOs and this situation might drag on for months.
Mr Sukarno said the LAOs are counting on a full government subsidy to cover their revenue shortfalls to get them out of trouble.
The money could come from the central budget or Covid-19 relief loans which would require rejigging the budget expenditure bill now being scrutinised in the House of Representatives.