By Marcela Ayres and Bernardo Caram
BRASILIA (Reuters) - Brazil's economy minister backs a proposal to expand cooking gas subsidies for low-income families in response to soaring crude prices during the Ukraine conflict, two Economy Ministry sources with knowledge of the matter told Reuters on Thursday.
As crude prices have topped $110 a barrel, political pressure mounted on Economy Minister Paulo Guedes to contain fuel prices stoking double-digit inflation in Latin America's largest economy.
More funds for cooking gas subsidies are part of a proposal already in the Senate to change how the state ICMS tax is calculated for fuel.
A rival Senate bill would create a fund to stabilize fuel prices in Brazil, but the ministry opposes that for cost effectiveness reasons, said the sources, who requested anonymity to discuss confidential government talks.
On Wednesday, Senate President Rodrigo Pacheco said votes on both bills would be on the table next week.
One of the ministry sources said an expanded cooking gas voucher would be "less bad" from a fiscal point of view, as it focuses on helping the disadvantaged rather than across-the-board subsidies.
The bill's chief sponsor, Senator Jean Paul Prates, proposed that the program's budget should double this year to reach 11 million families, which would require an additional 1.9 billion reais ($377 million).
He suggested that the cost could be covered with an extraordinary credit, bypassing Brazil's constitutional spending cap, but the ministry sources said it would require cuts to spending elsewhere.
($1 = 5.0408 reais)