The Ministry of National Defense (MND) denied a media report Monday that each military officer could get a 10 percent pay raise after the preferential tax treatment given to military personnel is eliminated, as early as next year. Military members and school teachers have long been exempt from paying taxes on their income, but the Apple Daily reported that the Executive Yuan is expected to abolish the tax break next year. The report said that to compensate military personnel for the tax policy change, the MND has finalized a scheme to raise the salaries of all service members, based on the principle of raising pay by the same amount levied in income taxes. As a result, the report said, each military officer could get an estimated 10 percent or even higher pay raise. The MND said in a statement Monday, however, that the report was not factual because the ministry has yet to finalize any salary adjustment scheme. According to an Executive Yuan policy directive passed in 2002, the MND said it will draft a salary adjustment package in line with the principle of no reductions in service members' income after the Legislative Yuan completes legal amendments and sets a date for enforcement of the new taxation rules. The draft package of income tax amendments is still pending legislative approval. Meanwhile, a report carried in the Monday edition of the China Times said the government's personnel expenditure will increase by at least NT$24 billion annually after an all-volunteer military service system takes effect in 2014. Based on that estimate, the country's more than 5 million households that file taxes will pay an additional NT$4,000 in income tax per year to help finance the all-volunteer system, the report said. Responding to the report, the MND said the government's personnel expenditures will increase in a steady manner based on the military's well-devised recruitment system. Moreover, the all-volunteer service system will help reduce training and operational costs because service members will stay longer in the military and thus become more adept at operating weaponary systems. Such a reduction will help offset increases in personnel expenditure, the ministry argued. 