PESHAWAR: Malakand division, a tax-free zone, is contributing nothing to the province’s exchequer despite tourism boom and massive government spending on infrastructure.

In contrast, tax collations from the hospitality sector, including hotels and restaurants, in the adjoining Hazara division totalled Rs145.45 million during the last over 30 months, according to the figures of the KP Revenue Authority.

A breakdown of the tax details of the region’s restaurants and hotels shows that Hazara division contributed Rs50.13 million to the exchequer in 2018-19, Rs64.921 million in 2019-20 and Rs30.4 million in the first seven months of the current fiscal.

The government had exempted former Fata and Pata, including Swat, from all taxes and duties from June 2018 to June 2023.

MPA Waqar Ahmad insists people unable to pay taxes after suffering many economic setbacks

Malakand division in general and Swat in particular are receiving windfall from the government’s largesse to promote its tourism sector. After completing the first phase of Swat Expressway, the provincial government is gearing to start work on Phase II of the expressway, which will run the full length of the district.

Recently, the government reopened the Saidu Sharif airport after the decades long closure to promote tourism in the region.

It has also planned to set up a cable car of several kilometers stretch to connect the picturesque Kumart Valley in Upper Dir known for its wilderness to Madaklasht area of Lower Chitral district at the cost of around Rs32 billion.

Also, majority of the tentative integrated tourism zones fall in Malakand division.

The government is contemplating to set up a cricket stadium in Kalam area of Swat district.

“Spending on tourism has two aims: one is to create employment opportunities for locals and the second is to generate revenue for the government, which is not happening despite investments and increase in the number of domestic and foreign tourists,” a source told Dawn.

He said during the previous winter season, around 40,000 tourists visited Kalam alone.

Official figures of the tourism potential of the Malakand division showed that 200,000-220,000 people visited the Malakand division over a period of three months (7,000 daily) before the Covid-19 lockdowns were imposed in March 2020.

On the other hand, figures for Hazara division showed that Mansehra district, which accounts for a major chunk of tourist influx in the region, received only 6,000-7,000 tourists every month during the period.

A major hotel in Swat’s Malam Jabba area is collecting Rs25,000 plus 10pc service charges from visitors for one night stay in a single room, while the family room costs up to Rs32,000. On the contrary, a major hotel in Peshawar charges Rs13,800 for a single room and Rs16,100 for double bedroom for a night.

Despite this huge discrepancy in rates, the Swat hotel doesn’t pay any tax to the government.

Ashfaq Khan, a resident of Peshawar, who visited Malakand in the off-season in the winter season this year, said he paid Rs10,000 for a single room at an ‘average’ hotel in Mingora.

The socioeconomic indicators from agriculture, industry, health and education sectors in Swat came off comparatively better than those in Torghar, Tank, Battagram, Hangu and other districts.

The Development Statistics of Khyber Pakhtunkhwa, 2020, an official document, reveals that Swat district produced 85,315 tons of fruits in 2018-19 against 83,076 tons in the corresponding year.

“The people of Swat are not opposed to taxes but the reason of them not paying taxes is that their district has suffered years of terrorism followed by floods and now Covid-19 pandemic,” said Awami National Party MPA Waqar Ahmad Khan.

He said having suffered many economic setbacks, the people were not in a position to pay taxes.

Swat Hotels Association president Zahid Khan claimed that Swat alone accounted for more than 70 per cent of the province’s total tourism.

He, however, said the tourism industry of Malakand division was not in position of pay taxes due to the impact of the region’s recent violent past on economy and poor infrastructure.

Mr Zahid said the government’s figures on tourist arrivals were exaggerated one as the ‘real’ tourists, who stayed in hotels and contributed to the local economy, didn’t total more than 100,000 a year,

He added that the rest were picnickers, who even took tents, stoves, utensils, food and beds along and camped wherever they wanted.

“The government should improve road network and provide other allied facilities before the extension of taxes to Malakand,” he said.

Malakand division, especially Swat district, is drawing investors, who are putting money in the hospitality sector as the region has been exempted from paying taxes.

The tax exemption is resulting in the mushroom growth of the hospitality sector in the district.

According to the hotel association’s president, there are 950 hotels and restaurants in Swat only, while more hotels are under construction.

He said the tourism sector of Swat had suffered around Rs19 billion losses due to the Covid-19 pandemic last year.

Chitral districts of Malakand division follow the Swat district in terms of tourist arrivals. Both districts with their major tourist events, including Kalash and Shandur polo festivals, attract a large number of foreign tourists as well. Kumrat area of Upper Dir district is another emerging tourist destination in the province.

Special assistant to the chief minister on information Kamran Bangash said currently, no proposal was under consideration to bring Malakand district under the tax net even beyond 2023.

“The entire region has suffered due to terrorism and the government is trying to revive tourism as a sector to restore economic activity by providing incentives to the hotel industry, including Hazara division,” he said.

Published in Dawn, May 31st, 2021