Duty on imported maize has been removed in the next four months, which coincides with the harvest season, to lower the cost of staple maize flour that has increased 75 per cent over the past year on raising grain costs.
National Treasury Cabinet Secretary Henry Rotich said bread and wheat flour will no longer attract the 16 per cent value added tax.
Tax had been removed on bread, maize and wheat to lower food prices and ease pressure on inflation.
This means that bread currently retailing at Sh50 should drop by Sh8 if the bakers pass on the tax benefit to consumers.
“Bread and maize flour are VAT exempt, which means they do not benefit from deduction of input tax,” said Mr Rotich.
He said: “In order to make these commodities affordable for the common mwananchi, I propose to zero rate bread and maize flour”.
Year-on-year inflation surged to 9.04 per cent last month after drought drove up food prices, and the Central Bank forecast indicates that cost of basic items will continue to rise in the next two months.
The target range is 2.5 to 7.5 per cent. The rally in food prices saw annual food inflation hit a high of 16.50 per cent.
Kenya declared drought a national disaster on February 10, calling for aid to counter drought that is posing a major risk to people, livestock and wildlife.
The price of maize 90 kilogramme bag has hit a record Sh4,200, up from Sh2, 800.
This has increased a packet of maize flour to Sh140 from Sh80 over the period.
Kenya and other regional countries face a shortage of white maize and imports from Mexico would attract 50 per cent duty.
Mr Rotich urged millers, wholesalers and retailers to cut the price of bread and other wheat products.
Kenya National Bureau of Statistics says that between December and January, food and non-alcoholic drinks’ index increased by 1.66 per cent.
This was attributed to increases in prices of cabbages, spinach, sukuma wiki, maize flour, wheat flour and maize grain which were contributed by the drought.