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UPDATE 1-Brazil tax reform likely delayed until 2020, says gov't Senate leader

Anthony Boadle and Maria Carolina Marcello

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BRASILIA, Sept 12 (Reuters) - The Brazilian government's Senate leader, Senator Fernando Bezerra, said on Thursday that he cannot see tax reform clearing Congress before the first half of next year, in what would be a major roadblock on the administration's economic reform drive.

In an interview with Reuters, Bezerra said delays in the Economy Ministry presenting its proposals and differences between the two chambers are likely to put the brakes on the overhaul.

"In my view, tax reform will not be passed before the first half of 2020," he said, even though there is political consensus that the system needs to be simplified and some form of value added tax on goods and services should be implemented.

After getting pension reform to the brink of full Congressional approval earlier this year, the government has made tax reform a priority for the second half of the year.

Bezerra was speaking a day after an Economy Ministry official involved in drafting the government's tax reform proposals was fired, reflecting disagreements within President Jair Bolsonaro's cabinet about the form legislation should take.

Marcos Cintra, the ousted special secretary for the federal revenue service, had favored reintroducing a financial transactions tax, an unpopular move that Bolsonaro blocked but which powerful Economy Minister Paulo Guedes still backs.

There are differences between different proposals in the Senate and lower house that must be reconciled, Bezerra said, but only after the government makes its proposal. That could be a separate bill or amendments to current bills, he said.

Bezerra said another bill overhauling Brazil's social security and pension system, Bolsonaro's top legislative priority aimed at reducing the government's huge budget deficit, should clear Congress by mid-October. The pension reform bill has already been approved by the lower house.

Bezerra said it has the support of at least 56 of the 81 senators and will be approved on Sept. 24 in the first of two votes required for bills that amend the Constitution.

The second vote will be held on October 10 or October 15 at the latest, he said. (Reporting by Maria Carolina Marcello and Anthony Boadle, Editing by Rosalba O'Brien and David Gregorio)