Brazil lawmakers back tax break for middle class

The bill, which awaits Senate approval, would exempt about 16 million Brazilians from paying income tax, according to government estimates.

The text broadens eligibility for tax exemption for Brazilians making up to 5,000 reais ($940) a month, up from the current cut-off of 3,000 reais.

It was adopted in a unanimous vote, including support from the opposition led by the party of far-right former president Jair Bolsonaro.

The bill proposes a tax increase for high-earning individuals to offset the loss in government revenues.

Anyone making more than 50,000 reais a month currently pays an average of 2.5 percent income tax. That rate would gradually increase to 10 percent if the bill passes.

The bill is popular among supporters of President Luiz Inacio Lula da Silva's left-wing government.

However, the proposal upset markets when it was unveiled by the government last year, along with planned spending cuts, triggering a historic depreciation of the local currency.

The bill's sponsor, lawmaker Arthur Lira, said it would offer "tax justice" for "those who earn the least."

Lula has said he may seek re-election next year.