Why Brazil’s Middle Class Is Turning Against Lula

Brazil’s middle class abandons President Lula as his policies pile costs on them, government statements confirm.

In May 2025, Lula raises the IOF tax on international card purchases from 3.38% to 3.5%, generating R$20.5 billion ($3.6 billion). This hits travelers and online shoppers, shrinking budgets.

Electricity bills rise 1.4% to fund the Tarifa Social, freeing 60 million low-income Brazilians from payments, the Ministry of Mines and Energy states. Middle-class households bear these costs, stirring anger as 2026 elections near.

In 2023, Lula reinstates PIS/Cofins taxes on fuels, hiking gasoline prices by R$0.47 per liter, the Federal Revenue Service reports. This raises commuting and goods costs, pinching middle-class wallets.

Tax reforms tighten exemptions for low-income earners, reducing benefits for middle-class taxpayers, Finance Minister Fernando Haddad notes. This cuts disposable income for 50.1% of households, classified as middle class.

Businesses face IOF rates on credit climbing from 1.88% to 3.95%, curbing investment, the Federal Revenue Service indicates. Companies pass costs to consumers, inflating prices and threatening jobs.

Why Brazil’s Middle Class Is Turning Against Lula

A 2024 bill mandates minimum pay and pensions for gig workers, the Ministry of Labor confirms. Drivers protest lower earnings, while ride-sharing costs rise for middle-class users.

Lula’s team labels these “tax justice,” targeting loopholes, Haddad claims. Yet, they sidestep energy lobbies, whose solar subsidies—tripling adoption from 2021–2024—raise grid costs for non-solar households.

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Brazil’s fiscal rules freeze R$31.3 billion ($5.5 billion) in 2025 spending, with 14.75% interest rates adding pressure, Central Bank data reveals. Lula prioritizes revenue, sparing influential groups.

Middle-class voters fume as polls show Lula’s disapproval surging, government sources report. Businesses warn taxes could spike prices, industry leaders state.

Lula juggles fiscal needs and electoral goals, but middle-class frustration grows. With 2025 growth projected at 2%, Brazil faces economic uncertainty, official forecasts warn.

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