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INTERVIEW-Brazil's Campos targets taxes, Petrobras to boost economy

SAO PAULO, April 17 (Reuters) - Eduardo Campos, the centrist former state governor running third in Brazil's presidential race, plans to lower the tax burden and set a formula to automatically raise fuel prices at state-run oil company Petrobras if he wins the October election.

In a wide-ranging interview, Campos defended those and other reforms championed by Brazil's business community, which has largely soured on left-leaning President Dilma Rousseff after three-plus years of slow economic growth.

Recent polls show Rousseff with a clear lead as she seeks a second term. She has around 40 percent support thanks to strong backing from poorer Brazilians who are happy with government welfare programs and unemployment still at record lows.

Campos trails with about 10 percent support, while another centrist, Senator Aecio Neves, has about 16 percent.

But Campos says his message of improving Brazil's business climate while protecting social gains made during last decade's economic boom will catch on, especially as voters pay closer attention after the soccer World Cup ends in July.

"We must improve our macroeconomic fundamentals, and it won't be done by the old political order," he told Reuters in the interview at a cafe in Sao Paulo's financial district. "We're telling society that it's possible to make a change."

Campos, 48, said he would implement a transparent formula that would allow Petroleo Brasileiro SA, or Petrobras as the state oil company is known, to raise fuel prices.

Under the current system, the Rousseff administration has forced Petrobras to keep wholesale gasoline and diesel prices that it charges retailers well below international levels.

That policy has helped contain high inflation but caused huge losses for Petrobras and contributed to a 32 percent decline in its shares since Rousseff took office in early 2011, angering many investors.

"There has to be a rule, one that everybody knows," said Campos, relaxed in a dark suit and open-collared white shirt. "We have to take away the political interference and respect ... (Petrobras') long-term planning, so it's not just at the whim of the government."

Campos also said he would pursue a simplification of Brazil's tax code, which the World Bank says is the world's most complex. Acknowledging that previous governments have failed to push a broad overhaul through Congress, he said he would break his reform into several pieces to increase odds of passage.

He said eliminating overlapping taxes would lead to a drop in Brazil's overall tax burden, one of Latin America's highest, although he said he wasn't ready to set a specific target.

Polls indicate that many wealthier Brazilians have already bought into Campos' agenda, but the working class has not.

Many of the 35 million or so people who rose out of poverty over the past decade are upset with inflation and poor public services, but leaders in Rousseff's Workers Party have warned that a change in government could lead to greater austerity and herald a return to a less egalitarian Brazil.

Campos bristled at such talk, noting that he was a minister under Rousseff's predecessor, Luiz Inacio Lula da Silva, and helped in the fight against poverty.

"We were part of that," he said. "No one is going to imagine that we're going to take that away."

Pressed on why he hadn't yet surpassed the 10 percent level in polls despite generally favorable media coverage since he sealed an alliance with popular environmentalist Marina Silva last October, Campos was more relaxed.

"Well, we were at 4, then 6, now 10," he said, chuckling.

"The election isn't yet an issue for Brazilians running around in their day-to-day lives," he added, noting that major TV exposure for candidates won't start until July. "The time hasn't come for us to rise (in polls) quite yet."

(Editing by Kieran Murray)