Brazil tax reform sponsor in Senate says proposal boosts regional development fund by 50%

BRASILIA, Oct 25 (Reuters) - Brazilian Senator Eduardo Braga, who is the sponsor of the country's consumption tax reform bill in the upper house of Congress, on Wednesday said his proposed text would raise by 50% a regional development fund aimed at compensating states for changes that would be covered by the federal government.

In a presentation to journalists, Braga specified that the fund would now have 60 billion reais ($12 billion), and that the extra 20 billion reais would be disbursed over a 10-year period starting in 2034.

The text of the bill previously approved in the lower house had earmarked 40 billion reais to compensate states for revenue losses in the comprehensive tax reform, which aims to merge five levies currently in place into a value-added tax (VAT) with separate federal and regional rates, which will be defined later by a complementary law.

Earlier this week, Finance Minister Fernando Haddad had indicated the government's willingness to consider a slight increase in the fund without specifying a particular figure.

The reform on consumption taxes has faced previous unsuccessful attempts by various administrations and stands as a pivotal move in President Luiz Inacio Lula da Silva's strategy to increase long-term economic growth. ($1 = 5.0065 reais) (Reporting by Marcela Ayres and Bernardo Caram; Editing by Bill Berkrot)