Relief for salaried persons

Budget 2008 is under preparation and many minds put together must be trying their level best to make a document which can increase state revenue to match ever increasing financial needs of the country. Salaried persons in private employment whose income comprises salary only, are required to pay income tax as per the law if their income exceeds a certain limit.
Unlike any other category of tax payers, 100% tax is deducted at source from their earning. Unlike other tax payers, they cannot understate their income. Not all salaried persons are lucky enough to get regular annual increase in their salary. Even increase in their salary cannot do any good to them because by then increase in cost of living is manifold.
Unlike salaried persons, all other earners, whether they are under the tax net or outside the tax net, can increase their inflow of money whenever they want. They may be manufacturers, traders, retailers or services providers. The moment they see cost rising around them, they immediately come into action and make a more than corresponding increase in price of their products. As a result increasing cost of living does not affect them, rather at times such situation proves more fruitful for them.
Many people (so called small time vendors and shop keepers) who do business (whether they have a formal shop/outlet or just occupy a space alongside a road etc) earn a lot of money, yet do not pay any income tax. They are never brought under the tax net. What an irony that a salaried person is taxed but a businessman is not taxed.
Perhaps because a salaried person is a known entity getting salary from a formal source whereas a so called small time vendors and shopkeepers do not have a formal business name and receive cash direct from customers. Is there no provision in income tax law to tax their income. If there exists a provision why the same is not enforced with full vigor and if there is no such provision, why the same is not introduce.
A few categories were required to file returns mandatory prior to 01-07-2005. These categories were (1) persons owing a motor vehicle in Pakistan (2) telephone/mobile phones subscribers (3) resident persons having undertaken foreign travel in the tax year other than travel for Haj, Umra or Ziarat (4) members of a club where monthly subscription exceeds five hundred rupees or admission fee exceeds twenty five thousand rupees. These provisions were very effective and should have never been ended. Full and serious enforcement of these provisions could bring a lot of people under the tax net.
Salaried persons who cannot increase their income on their own, in line with ever increasing cost of living, have to pay income tax. But so called small time vendors and shopkeepers who can increase their income on their own, in line with ever increasing cost of living, do not have to pay any income tax. Is this justice?
In budgets, relief is usually provided to Government employees and to some extent to industrial workers by enhancing minimum wages. But it is very rare that relief is provided by Government or employers to other employees working in private sector.
I was in Bahrain for 6 years (1978-1984). Prices of essential commodities like flour, sugar, rice, vegetable ghee/cooking oil, milk powder, mutton etc were controlled by government.
No seller was allowed to increase price of such commodities without clearance from Government. Just to give a couple of examples, when I landed in Bahrain, retail sale price of mutton was 1.00 Bahraini Dinar per kg and of sugar was 200 Bahraini Fils (equivalent to 1/5th of 1.00 Bahraini Dinar). When I left Bahrain after 6 years, retail sale prices of both items were exactly the same. Here in Pakistan such things can only be dreamed about.
Is it not high time that salaried persons are provided a relief they really deserve, ie exemption of salary income without any ceiling. Or if Government is so dependent on tax collected from salaried persons, at least basic exemption limit should be increased from Rs 150,000.00 to Rs 500,000.00. Loss of state revenue as a result of such change can be much more than compensated by bringing so-called small time vendors and shopkeepers under the tax net.