Khyber Pakhtunkhwa Chief Minister Sohail Afridi has asked Prime Minister Shehbaz Sharif to postpone the removal of tax exemptions for Malakand and merged districts [1].
The request comes as the provincial government warns that introducing taxes now could destabilize fragile economies in regions still recovering from security crises. Because these areas face unique development hurdles, the provincial leadership argues that sudden fiscal changes would create undue economic hardship [3].
During a meeting in Islamabad on Feb. 2, 2026, Afridi said the proposed withdrawal is a source of concern [1]. He said that the federal government has not yet fulfilled its previous commitments to the region [1]. The chief minister said that the province is currently bearing the burden of the merger alone [2].
The merged districts and the Malakand division have historically received tax breaks to incentivize investment, and support local businesses. Afridi said that maintaining these exemptions is critical to prevent undermining the recovery process in these vulnerable zones [3].
The provincial government's stance reflects a broader tension between federal revenue goals and regional stability requirements. By urging a deferral, the KP administration seeks to ensure that infrastructure and social services are stabilized before the tax base is expanded [2].
Afridi said the federal government must prioritize the socio-economic stability of these districts over immediate tax collection [1].
“KP bearing burden of merger alone: CM Afridi.”
This dispute underscores the ongoing friction regarding the integration of the former tribal areas into Pakistan's mainstream administrative and fiscal framework. If the federal government proceeds with the tax withdrawals despite the provincial warning, it may risk increasing local resentment and slowing the pace of economic integration in regions already prone to instability.
