Mexico's lower house of Congress approved the most controversial measures of a sweeping tax overhaul presented last month by President Enrique Peña Nieto.

The measures passed with the support of ruling Institutional Revolutionary Party, or PRI, lawmakers, as well as members of the conservative opposition National Action Party, or PAN, and the center-left opposition Party of the Democratic Revolution, or PRD.

The legislators voted 296-165 Friday to raise the highest income-tax rate above the current 30 percent ceiling.

If that measure eventually become law, people with annual incomes of between 500,000 pesos ($38,000) and 1 million pesos ($77,821) will be taxed at a 31 percent rate, while the tax rate will be 34 percent for those earning between 1 million pesos and 3 million pesos ($233,463) a year and 35 percent for those with annual earnings above 3 million pesos.

Lawmakers also approved a new levy on capital gains, which will be taxed at a rate of 10 percent.

Another measure approved by a vote of 293 to 177 would increase the sales tax in border cities from 11 percent to 16 percent. Processed foods for pets and chewing gum also would be taxed at that rate.

Proposals to tax private-school tuition and real-estate transactions were removed from the original bill.

The legislators also approved a measure that would tax junk food at a 5 percent rate.

All of the measures approved by the lower house will now go to the Senate, which is expected to begin debating them next week.

In presenting the tax-overhaul plan, Peña Nieto touted it as necessary to reduce inequality, noting that the increased revenue will be used to fund a new universal pension for all Mexicans over the age of 65 and a new unemployment insurance program.

He also said the overhaul would spur economic growth and shrink the informal economy.

The government said the changes made to the original proposal would reduce the projected revenue gains by 55 billion pesos ($4.3 billion).

But lawmakers reduced that shortfall by voting to raise the oil-price forecast in the plan from $81 a barrel to $85 a barrel.

EFE