The Burmese military has been forced to introduce new taxes and improve tax collection procedures to control the country’s economy, according to a new report by the United Nations Economic and Social Commission of Asia and the Pacific.

But UNESCAP’s ‘Social Survey of Asia and the Pacific 2006’, which was released yesterday, said the country’s informal economy remained large, making tax collection and regulations difficult.

“Further improvements in tax revenues are expected based on the replacement of ad hoc exemptions with a more transparent set of rules, and the possible introduction of excise taxes on alcohol, tobacco and luxury goods as well as a value added tax,” the report said based on figures for last year.

UNESCAP said the increased tax revenues were designed to help reduce Burma’s fiscal deficit. The financing of the deficit had been managed by Burma’s central bank, further fuelling inflation rates in the country.

While inflation levels were on the increase this month after the military’s decision to drastically raise the wages of civil servants and military personnel, the report put last year’s inflation figure at eight percent, down from 54 percent in 2002.

The report also said economic sanctions against the country had caused export rates to decline.

“Exports, especially of garments, from Myanmar have been adversely affected by international sanctions, while the services account has been eroded by larger profit repatriation and a decline in tourism receipts,” the report said.

According to figures in the report, Burma’s gross domestic product growth rate was 4.5 percent last year and the country’s agriculture sector had grown 4.2 percent.

But the report said the growth of the country’s agricultural sector had been hindered by the military’s forced reduction of rice prices - a move made to curb domestic unrest resulting from inflation rate increases.

The report also said 2005 saw less private investment in Burma and that the real wages of many workers had been eroded.