KHYBER: Members of the struggling industrial sector in Khyber Pakhtunkhwa`s merged tribal districts have sharply reacted to the federal government`s intent to roll back the relief in taxation the region was provided at the time of its merger with Khyber Pakhtunkhwa in 2018.

Last year, the federal government extended tax exemption for the region to the current year ending on June 30, 2025.

Sources told Dawn that an eightmember committee formed by the federal government on Dec 20, 2024, on taxation regime for tribal districts was under tremendous pressure from its two influential members -Pakistan Association of Large Steel Production andPakistan Vanaspati Manufacturers Association -to withdrew the tax relief package for the region.

Other members of the committee included adviser to the prime minister on political and public affairs Rana Sanaullah as it convener and MNA Amir Muqam, the state minister for finance and revenue, the chairman of the Federal Board of Revenue, the KP chief secretary, and former Sarhad Chamber of Commerce and Industry president Zahidullah Shinwari.

Sources told Dawn that the committee, through its terms of reference, was tasked with reviewing the prevalent exemption regime and its impact in terms of the revenue forgone and issue of the misuse affecting industries in area under taxation alongside recommending way forward to bring those areas under taxation regime, especially after the expiry of those exemptions on June 30, 2025.

The committee was also asked to engage with stakeholders to develop awareness and facilitate the industry in tribal districts for its transition to normal tax regimewith its final report to be submitted to the prime minister in four weeks` time.

Sherin Afridi, an industrialist from Khyber tribal district and the president of Bara Siyasi Ittehad, told Dawn that neither anyone from industrial associations in the former Fata and Malakand was consulted about the formation of that committee nor had the committee sought their recommendations on the vital issue concerning the future of the terrorism-affected residents of tribal districts.

Taking serious exception to the information emanating from Islamabad regarding the committee`s proposed recommendations, though delayed by four months, about abolition of the relief package in various taxes, Mr Afridi insisted that the federal government should sympathetically consider the backwardness of the region alongside the devastating effects of the decade-long terrorism and the subsequent military operations on the territory and its residents.

Shoaib Khan, an industrialistfrom Malakand, said exemption in taxation was given to the region to attractinvestorsand developindustry along with creating more job opportunities for skilled local youth who were earlier inclined more to join the outlawed militant groups.

He alleged that the federal government not only failed to honour its earlier written commitments of providing tribal districts with Rs100 billion annual development fund and a three per cent share in the NFC Award but was bent on clinching back whatever little was given for the industrial development of the region.

Mr Khan criticised the committee`s two members, including MNA Amir Muqam of the ruling Pakistan Muslim League-Nawaz and the KP chief secretary, over failure to `properly and convincingly plead the case` of tribal region, which, he said, was in dire need of massive investment and development with long-term exemption from all taxes.

He said that the federal government also wanted to strangle industries in tribal districts by reducingits production capacity while allowing them to produce product s under a stipulated quota approved by the government in accordance with the requirement of the existing population of tribal districts.

He wondered how the government would determine what quantity of a particular item was required for local consumption and who would monitor the operations of an industrial unit. He termed the proposal `utterly ridiculous.

Shahid Hussain, a young businessman from the region, urged the federal government to make proper and workable amendments in the tax regime for tribal districts with the consent oflocal entrepreneurs instead ofrepealingitaltogetherat the behest of an influential lobby, saying the new policy will further push the region into poverty and backwardness.

`If implemented as is suggested by the powerful steel and ghee manufacturing associations of the country, the new policy of taxing the industry in tribal districts will leave the existing industries into ruins, with financial losses to thetune of billions of rupees inflicted upon tribal industrialists and investors,` he warned.

He said that an `organised mafia of well-established manufacturers in big cities` was also aiming to capture the markets in the tribal districts at the cost of ruining local industry which had only recently steadied with some relief in taxation after the merger with KP.

Mr Hussain said there were some people among the local industrialists who would be misusing the tax relief facility by selling the imported raw material brought for the localindustry to bigindustries in large cities but that would not mean that other genuine industrialists and investors should be punished for a crime they had not committed.

He said that FBR had complete authority and resources to go after those who were misusing the tax relief facility instead of subjecting the entire tribal population to such ill-conceived and untimely policies that would backfire in the form of alienation of local people and massive unemployment.