Khyber Pakhtunkhwa Chief Minister Mohammad Sohail Afridi has urged Prime Minister Shehbaz Sharif to defer the proposed withdrawal of tax exemptions for the merged districts and Malakand Division. He argued that ending the incentives now could undermine economic recovery and increase hardship in regions still facing security and development challenges. The request comes amid growing opposition from the provincial government and local business community.
In a letter dated July 6, the chief minister requested that the existing tax exemptions remain in place until conditions in the merged districts and Malakand improve substantially. He said the tax relief was introduced as a transitional measure to encourage investment, industrialisation, and employment following the merger of the former Federally Administered Tribal Areas with Khyber Pakhtunkhwa. Afridi maintained that the objectives behind the exemptions have not yet been fully achieved.
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The chief minister also argued that the federal government had not fulfilled commitments made during the merger process. He said promised financial support, institutional assistance, and allocations under the National Finance Commission had yet to materialise. According to the letter, Khyber Pakhtunkhwa continues to bear heavy financial and security responsibilities while leading counterterrorism efforts and rebuilding conflict-affected areas.
Afridi further highlighted the economic impact of reduced cross-border trade with Afghanistan, inadequate infrastructure, limited industrial development, high transport costs, and energy shortages. He warned that withdrawing tax exemptions before addressing these structural challenges could discourage investment, weaken local businesses, and negatively affect public confidence. He also noted that a federal committee formed to review the issue had not completed consultations or issued recommendations before the proposal was made.
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The chief minister urged the federal government to continue the tax exemptions until its commitments to the province are substantially fulfilled and local economic conditions improve. He expressed hope that the prime minister would consider the request in the national interest, while noting that the Khyber Pakhtunkhwa Assembly has also passed a resolution calling for the proposed tax measures to be deferred.