PAKISTAN’S tax system suffers from a serious credibility crisis rooted both in the failure to tax all forms of income equitably and in persistent low compliance. With less than 2pc of the people paying income tax in a country where a considerable number enjoys lifestyles unimaginable even in far richer economies, it is not surprising that reliance on IMF programmes is a regular feature of fiscal management. It is against this backdrop that the widening gap between conspicuous displays of wealth — on the roads, at weddings, on polo grounds, etc — and declared income has become a challenge for tax authorities. This gap, compounded by the growing pressure on the FBR to meet revenue targets, has led to the creation of a Lifestyle Monitoring Cell to detect concealed wealth of individual taxpayers through open-source intelligence and social media. Even the initial findings are shocking. In three months, investigators ‘uncovered’ undeclared assets of Rs12.3bn in 38 cases of blatant displays of spending on luxury cars, lavish weddings, frequent foreign travel, imported horses, real estate, and other high-end lifestyles on social media. In most cases, the declared income is negligible relative to the assets on display.

The shift in the FBR’s focus on lifestyle spending signifies an attempt to map people’s consumption patterns and match them with their latest tax and wealth declaration to see if they have committed tax fraud. Such expenditures cannot be treated as taxable events in themselves but only as indicators of undeclared income. Even so, the underlying logic of targeting expenditure rather than income alone is a sound policy. International experience shows that expenditure-based income assessments, used in varying forms in different countries, can be effective in identifying the hidden assets of wealthy and self-employed people. When the tax authority shifts its focus from what a taxpayer claims to have earned in their tax and wealth returns to what and how they spend, chances of catching cheaters significantly improve. Therefore, the FBR’s decision to use lifestyle indicators and spending patterns is a positive initiative for strengthening tax enforcement and deterring tax evas

Published in Dawn, January 30th, 2026