(Australia Network News) The poorest people in Burma are paying more than half their income in taxes.

The Network for Human Rights Documentation-Burma says junta members and their cronies spend more than 50 per cent of the national budget on the military, but less than 1.3 percent on health and education.

The report says Burma's tax system lacks transparency and accountability.

Dr Alison Vicary, an economist at Macquarie University's Burma Economic Watch, says the report shows payments are often arbitrary and made to local military and officials in cash or by forced labour.

"The system of taxation is oppressive and has no legitimacy," she said.

"[It] is that the agencies collecting taxes are actively involved in the control and suppression of the population. So this is why with this appropriation of resources by the state from the private sector is actively involved in violence and human rights abuses."

The report was based on interviews with over 340 people across Burma and noted how the government and military arbitrarily collected taxes in the form of cash, land, goods and forced labour.

People were also being charged arbitrary fees at checkpoints, as well as having to make forced donations for festivals, school buildings, school registration and equipment.

Cheery Zahau, from the Human Rights Education Institute of Burma, says the most critical issue is accountability and transparency in terms of taxation.

"We learnt that people don't know about tax and people don't know they are being taxed through their labours and through their land," she said.

"So accountability and transparency within this administration is very worrying, very corrupt. It adds problems to their basic survival; they can't send their children to school, cannot save money, they don't have enough money for hospitals for health care anymore."

Dr Vicary says Burma's economy is a "militarized state", with major resources controlled by the armed forces, and senior officials overseeing control or influence of the private sector.

The military has ruled Myanmar since 1962, and the generals initially applied a 'Burmese way to socialism' that impoverished the country.

Some economic reforms took place in the late 1980s and 1990s, but largely major business remains under military's control.

Dr Vicary says the legacy of mismanagement has left millions in poverty requiring years before recovery.

"This is the problem - is one of the biggest damages that this government has done - it that it's impoverished people for several generations and for several generations into the future because the damage that's been done," she said.

"Burma's now so poor - that it's going to take a long time to right the economic problems that the regime has caused."