Khyber-Pakhtunkhwa Chief Minister Muhammad Sohail Afridi has formally written to Prime Minister Muhammad Shehbaz Sharif, urging the federal government to postpone its decision to revoke tax exemptions for the merged districts and Malakand Division. In the letter, Afridi described the move as a clear deviation from commitments made by the federation at the time of the merger of the former Federally Administered Tribal Areas (FATA) into K-P. He warned that this step could seriously undermine public confidence in the entire merger process.
Chief Minister's Concerns Over Unfulfilled Promises
Afridi emphasised that the people of K-P are not opposed to taxation. "They fully support a fair, equitable, and sustainable tax system to strengthen Pakistan's economy," he stated. However, he clarified that the core issue is not the imposition of taxes but the premature withdrawal of exemptions that were promised as part of the merger agreement. The Chief Minister reminded the Prime Minister that the merger of the former FATA was carried out on the basis of broad national consensus, with the federal government giving explicit assurances of continued financial support and institutional cooperation for the successful integration and development of the region.
Despite the provincial government's full implementation of the merger process, many federal promises remain unfulfilled, Afridi noted. K-P continues to bear disproportionate financial, administrative, and security responsibilities. The NFC share promised by the federation for the merged areas has also not materialised, he added.
Impact on Border Trade and Local Economy
Afridi further pointed out that the prolonged closure of legal border trade and transit with Afghanistan has severely impacted commercial activities, particularly in border districts, where the local economy has historically depended on cross-border trade. Factors such as locational disadvantages, inadequate infrastructure, limited industrial growth, high transportation costs, and energy shortages have further hindered private investment, job creation, and sustainable economic development.
Tax Exemptions as Transitional Measure
The tax exemptions for the merged districts and Malakand Division were introduced as a transitional measure to promote investment, industrial growth, employment, and economic integration in these historically backward areas. Withdrawing them before achieving their developmental objectives and fulfilling federal pledges would discourage investment, hamper economic recovery, and place an additional burden on local businesses and residents, the Chief Minister cautioned.
Lack of Consultation
Referring to the federal government's consultative process, Afridi noted that an inter-provincial committee headed by a federal minister was formed to compile recommendations on the proposed tax measures. However, despite holding a few limited meetings, the committee failed to finalise its recommendations. Nevertheless, the proposal to withdraw the exemptions has been advanced without meaningful consultation with the provincial government and local stakeholders.
Warning of Negative Repercussions
The Chief Minister warned that such unilateral actions, taken without fulfilling federal commitments or completing the agreed consultative process, could damage public trust and have negative repercussions for peace and stability in these sensitive regions.
