Ostentatious tax evasion

In a world where luxury is proudly flaunted online by celebrities, influencers and other citizens alike, the FBR's decision to form a Lifestyle Monitoring Cell is a pragmatic step towards cracking down on tax evasion. The new unit, tasked with scanning social media platforms such as Instagram, TikTok and YouTube for evidence of lavish spending, is a modern response to a chronic issue that plagues the nation.

Pakistan's tax-to-GDP ratio - among the lowest in Asia - is a fundamental weakness that has led the country into nearly two dozen IMF programmes. With less than 2 per cent of the population paying income tax, the burden falls disproportionately on the compliant few, while a visible elite enjoys extravagant lifestyles without contributing their fair share. This new initiative directly targets this imbalance by identifying individuals - be they influencers, celebrities, realtors or businesspeople - whose visible assets and expenditures clearly contradict their declared incomes.

While there has been some concern about privacy, FBR officials say the approach is based on "open-source intelligence" because "their Instagram accounts are a public declaration". FBR officials noted in news reports that when individuals voluntarily post details of their multimillion-rupee weddings, complete with diamond sets, drone light shows and international consultants, they are making a public statement of their wealth. The monitoring cell simply uses this publicly available information to build digital profiles and gather evidence, including screenshots and timestamps, for potential tax or money laundering investigations.

Unlike most FBR revenue expansion efforts that just squeeze existing salaried taxpayers even more, this one appears to have the potential to be a reasonable money spinner that only hits those who ostentatiously show off their wealth. The FBR must now ensure that the evidence collected by the cell is actually acted upon.