Key Takeaways
- Khyber Pakhtunkhwa Chief Minister Sohail Afridi has requested the postponement of proposed tax exemptions for merged districts and Malakand.
- The request comes amid criticism from KP’s PTI-led government and traders in the region.
- Afridi argues that commitments made by the federal government during the merger have not been fulfilled.
Khyber Pakhtunkhwa Chief Minister Sohail Afridi has written to Prime Minister Shehbaz Sharif, urging him to defer the proposed withdrawal of tax exemptions in the merged districts and Malakand division. The letter, dated July 6, was made public by Dawn newspaper.
In his communication, CM Afridi emphasized that the existing tax exemptions should continue until conditions justifying such measures have materially improved. He stated, 'The decision to withdraw these exemptions has been taken despite the fact that the people of KP and their elected provincial government stand hand in glove with the federal government in strengthening Pakistan’s fiscal position through a fair and sustainable taxation system.'
Afridi highlighted that the issue extends beyond mere taxation, pointing out that it is against the commitments made by the federal government during the merger. He argued, 'The merger of the erstwhile Fata with KP was founded upon a broad national consensus and accompanied by explicit commitments on the part of the federation to provide sustained financial support and institutional assistance for the successful integration and development of the region.'
Despite KP’s commitment to implement the merger, Afridi contended that these commitments have not been fulfilled. He stated, 'This has placed disproportionate financial, administrative and security responsibilities on the KP government.' Additionally, he noted that allocations within the National Finance Commission (NFC) made by the Centre have also not materialized.
The KP Chief Minister further highlighted the province’s role as Pakistan's frontline in the fight against terrorism. He cited sacrifices made by the people of KP and the significant expenditures incurred on law and order, policing, counter-terrorism operations, rehabilitation of affected communities, and reconstruction of damaged infrastructure. Afridi also drew attention to the disruption of cross-border trade with Afghanistan, which has reduced commercial activity in border districts.
Afridi argued that these challenges are compounded by persistent locational disadvantages, inadequate infrastructure, limited industrialization, high transportation costs, and energy constraints, all of which continue to impede private investment, employment generation, and sustainable economic growth. He noted, 'These challenges are further exacerbated by the fact that socio-economic conditions which created the need for tax exemptions persist.'
He recalled that the tax exemptions were conceived as transitional measures aimed at promoting investment, industrialization, employment, and economic integration in historically disadvantaged regions. Afridi argued, 'Withdrawal at this stage — before the intended developmental objectives have been realized and before the federation has fulfilled its commitments — is likely to discourage investment, weaken economic recovery, and place an additional burden on local businesses and communities.'
The letter also mentioned a committee constituted by the federal government on December 20, 2024, which Afridi hopes will address these concerns. He concluded by emphasizing that the proposed withdrawal of tax exemptions is premature given the current socio-economic conditions in KP.
The decision to withdraw these exemptions has been taken despite the fact that the people of KP and their elected provincial government stand hand in glove with the federal government in strengthening Pakistan’s fiscal position through a fair and sustainable taxation system.
Sohail Afridi, Khyber Pakhtunkhwa Chief Minister
The merger of the erstwhile Fata with KP was founded upon a broad national consensus and accompanied by explicit commitments on the part of the federation to provide sustained financial support and institutional assistance for the successful integration and development of the region.
Sohail Afridi, Khyber Pakhtunkhwa Chief Minister
