Treasury CS Henry Rotich has proposed zero rating for bread and maize flour and a reduction in their prices.
The prize of maize flour ranges from Sh130 to Sh150 while that of bread is Sh52 in supermarkets.
"I expect to see a price reduction on these basic commodities," the CS said when he read the 2017/18 budget on Thursday.
"Manufacturers and retailers who sell such goods and products will be forced to reduce the prices, failure of which I will revoke the policy."
Rotich also said that importation of maize in the next four months will be duty free because of the effects of drought.
"White maize will be imported on free taxes. In order to make them affordable I propose that VAT be removed completely," he said.
The government declared a national disaster the drought that has affected 23 arid and semi-arid counties and pockets of other areas.
President Uhuru Kenyatta asked all local and international stakeholders to support the government by up-scaling drought mitigation programmes.
“Support from our partners would complement efforts in mitigating the effects of drought,” Uhuru said at State House in Nairobi.
The President noted that the drought has affected human beings, livestock and wildlife.
More on this: Kenya declares drought national disaster, asks for help
Speaking after the budget reading, Budalang'i MP Ababu Namwamba said he was happy with the announcement.
"I am happy because zero-rating the products offers Kenyans immediate relief," he said.
He added: "We have seen this kind of breaks but they have not translated into immediate reductions. Let us see cheaper unga tomorrow."
The government has raised betting taxes to 50 per cent in all categories, dealing the industry a major blow.
Rotich noted that betting and gaming have become widespread yet the environment is inadequately regulated.
Regarding public servants, the Cabinet Secertary said Treasury will take steps to harmonise salaries and freeze recruitment starting July.