The provincial government of Khyber Pakhtunkhwa may promulgate an ordinance to remove anomalies arising out of the merger of erstwhile Federally Administered Tribal Areas (FATA) with Khyber Pakhtunkhwa (KP) and give legal cover/validity to actions, administration in tribal areas as well as tax incentive package for industry/businesses.
It is learnt that the decision to promulgate a provincial ordinance was approved in the last meeting of Federal Government's Sub-Committee on FATA Reforms with the Provincial Special Task Force on FATA reforms held in Chief Minister Secretariat under the chairmanship of caretaker Chief Minister KP Justice Dost Muhammad Khan (retd).
The meeting decided that the provincial government will promulgate an ordinance for removing the anomalies arising out of the merger of erstwhile FATA with Khyber Pakhtunkhwa and giving legal cover and validity to the steps taken in this regard. This ordinance will not only reduce the burden on the administration in tribal areas but will also fill in the legal vacuum by giving certain powers to Jirga to act like a jury.
In May 2018, the National Assembly passed a constitutional amendment seeking merger of the FATA with KP.
Secondly, a multi-donors conference shall be arranged in Peshawar in collaboration with donors and development partners for seeking financial assistance for the development of infrastructure in tribal/merged areas.
Thirdly, the federal government shall also announce a comprehensive package for the development, rehabilitation and reconstruction of the damaged infrastructure in newly merged areas.
Fourthly, a comprehensive tax exemption package as agreed upon by the subcommittee of the federal government and provincial government shall be announced by the federal government to send a message of goodwill gesture to the people of the merged areas of former FATA and PATA.
During this meeting, a presentation was given by the secretary finance regarding tax concessions on (i) Federal Excise Duty, (ii) Customs Duty, (iii) Sales Tax, and (iv) Income Tax, proposed for the erstwhile FATA and PATA, and all his proposals were accepted except that of taxing such industrial units whose owners are from settled areas as such steps will discourage investors from other areas to invest in tribal areas.
The federal minister for law agreed with the proposal of provincial government and assured his full cooperation and support in making a comprehensive strategy for the development and socioeconomic uplift of the tribal areas.
It is important to mention that a past meeting of the Economic Coordination Committee (ECC) of the Cabinet chaired by former Prime Minister Shahid Khaqan Abbasi approved tax and other exemptions for FATA and PATA. The meeting of the ECC had considered a proposal for allowing tax and other incentives for the next five years for the people of erstwhile Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA) following the 31st Constitutional Amendment for their merger with Khyber Pakhtunkhwa.
The tax exemption allowed to FATA and PATA included; (i) exemption of income tax on profits and gains of existing businesses conducted by individuals for a period of five years. These businesses, however, need to be registered with Federal Board of Revenue (FBR) by September 30, 2018; (ii) exemption from sales tax to the retailers to facilitate the general consumers; (iii) domestic consumers of electricity would be exempted from sales tax on domestic consumption of electricity; (iv) Federal Excise Act 2005 shall replace the erstwhile Central Excise Act 1944; (v) non-customs paid vehicles would be allowed to be used in erstwhile FATA/PATA for a period of five years ending on 30th June 2023. However, these vehicles will not be allowed to cross over to other areas of the country. On the expiry of the five years' relaxation period, the vehicles would be regularized on payment of leviable duty and taxes; (vi) exemption from all withholding taxes, except on salary; (vii) and any person seeking to set up new industrial undertaking is allowed exemption from income tax after the approval of the ECC.
During the last meeting of the Federal Government Sub-Committee on FATA reforms, the caretaker minister for agriculture KP presented the issues of financial plan for FATA merger and provision of funds, legal and constitutional aspects of FATA merger, administrative setup & further course of action along with short, medium & long term planning for development in FATA, rehabilitation of TDPs, compensation packages for damaged infrastructure and commercial units.
The federal minister for law expressed his views regarding merger of FATA into Khyber Pakhtunkhwa and pointed out that legal, administrative and financial issues arising from the merger of FATA have created two major problems of immediate nature i.e. legal vacuum and tax issues.
With regards to above problems, the minister proposed that after exhaustive discussion and exercise, an ordinance has been prepared by the Federal Ministry of Law to fill the legal gap in erstwhile FATA for an interim period of 3 months.
He requested the caretaker chief minister for his consent regarding the said ordinance. He also expressed the importance of the said ordinance for validation of the steps to be taken by the interim/caretaker government.
The caretaker Chief Minister KP applauded the struggle and sacrifices of Pak Army and security forces for elimination of militancy and restoration of peace in the tribal areas. He also elucidated his views regarding merger of FATA and pointed out that some people especially Maliks/elders and religious leaders are not in favor of this merger and temporary legal solution can only be an escape for the interim government, however it will create legal anomalies and the people of tribal areas, especially the educated youth, may show their resentment and discontent over such temporary legal arrangements. He emphasized for a more comprehensive and compact strategy for dealing with the issues arising from merger of erstwhile FATA with the Khyber Pakhtunkhwa.
The caretaker chief minister pointed out that a short term, medium term and long term strategy may be devised for realization of the objectives of this merger in true spirit. He proposed that first priority may be given to the rehabilitation of TDPs in their areas coupled by resumption of commercial activities and compensation packages/incentives. Similarly a huge investment is needed to develop the infrastructure of tribal areas, however the provincial government is in the midst of a huge financial crisis and the provincial resources cannot bear any further financial liability. The caretaker chief minister further emphasized that the lives of tribal peoples may be made easy and they should see positive change in their lives after merger of FATA with Khyber Pakhtunkhwa.
He added that new schools, water supply schemes and roads may be built on immediate basis. The local resources such as mineral wealth of tribal areas may be explored and developed in order to improve the economic condition of tribal areas.
Moreover a comprehensive and substantial relief package may be given to the people of tribal areas. For this purpose the caretaker chief minister proposed that the federal and provincial governments may arrange an international donor's conference in Peshawar within the next 10 days for fund-raising where all the donors like DFID, ADS, World Bank, EU etc shall participate.
He also said that the civil administration may be properly trained before sending them into the tribal areas, proper infrastructure for civil administration may be developed and military may gradually disengage in those areas, It was proposed that people of FATA may be involved in the reforms process.
The ACS FATA Secretariat gave details of some of the compensatory packages being given to the people of North and South Waziristan and developmental activities going on in tribal areas, however he also said that these activities and compensatory packages are too little to win the hearts and minds of the people of ex-FATA and to bring visible changes in the lives of local people, sources added.
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