The law re-introducing a 16 per cent value-added tax (VAT) on most foods has further inflamed discontent at a time when teachers are in their second week of a nationwide strike demanding higher housing, medical and transport allowances, while other civil servants including the police are clamouring for higher pay.

A statement from the presidency on Wednesday said maize flour and bread would remain zero-rated, a day after protesters marched to parliament demanding the government scrap the plans.

Finance Minister Henry Rotich said last month that he would re-introduce the tax, exempting only raw food items.

President Uhuru Kenyatta, who came to office in April promising to lift millions out of poverty and create jobs in east Africa’s biggest economy, met members of parliament drawn from his Jubilee coalition over the proposed VAT law, where it was agreed that maize flour and bread be exempted.

“A successful amendment (of the proposed law) will ensure these vital commodities continue to be zero-rated,” the statement said.

But Stephen Mutoro, secretary general of the Consumers Federation of Kenya, says the new tax will fan inflation now at five per cent and that the move was “too little, too late.”

“The definition of food goes beyond maize flour and bread,” Mutoro told Reuters.

Milk, rice, wheat and other processed foods would still attract taxes, he said, promising further protests.

Opinion pollster Ipsos Synovate found 86 per cent opposition to the VAT move in a survey last month.

Most luxury goods are already subject to VAT, as are alcohol, cigarettes and mobile phone air time.

The exemption of the two items would have a “minimal” impact the Treasury’s aim to raise cash to help plug a budget deficit of around 330 billion shillings (US$3.8 billion), finance secretary Rotich said.

VAT would be used for spending including paying for health, education and was not meant to “target the poor”, Rotich told Reuters.

— James Macharia is Reuters’ East Africa deputy bureau chief in Nairobi, Kenya.

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Officers hunting down the cattle thieves in a remote northern region on Saturday came under fire from machine guns and rocket-propelled grenades in an ambush the police said was conducted with "military precision".

"We have recovered more bodies, we now have 32 in total. They were ambushed by attackers bearing sophisticated weapons, including machine guns," Osman Warfa, provincial commissioner of the vast Rift Valley province, told Reuters.

The police were pursuing raiders from the ethnic Turkana community who had stolen cattle from the Samburu tribe, authorities said. The two groups frequently raid cattle from each other and fight over grazing land and watering points.

The violence has created security concerns ahead of a presidential election scheduled for March next year — the first since a disputed election in 2007 fuelled ethnic slaughter that killed more than 1,200 people and forced about 300,000 from their homes.

Warfa said some of the raiders were suspected of being former members of the security forces, now working as mercenaries. Authorities were searching for more bodies in the bushy escarpments where the raiders hide stolen cattle, he said.

Police trailed the bandits at night, hoping to lay siege to their village and recover the animals, but were instead outmanoeuvred and ambushed in a sprawling valley, police spokesman Eric Kiraithe said.

"It is easily the worst single attack on police."

Cattle rustling and clashes over grazing and farming land are relatively common between communities in arid areas of east Africa and often escalate into revenge attacks. It was not clear how many had been killed in the initial raid by the Turkana.

As cattle die of starvation due to drought, night-time raids are mounted to replace lost stock from neighbouring areas.

Arms smuggling

Following the initial raid by the Turkana, police set off after the bandits in the bushy valley where they were met with gunshots and rocket-propelled grenades near a village suspected to be the rustlers’ hideout in Samburu county.

"Police were on trucks, some were on foot when they were ambushed," said a senior police officer who declined to be named. "This area has always been prone to banditry."

Samburu county has a national game reserve dotted with herds of elephants, buffalo and zebra, and neighbouring Turkana county is where British explorer Tullow Oil struck the country’s first promising oil find earlier this year.

The remote areas to the north of Kenya rely on vigilante groups for security. Many homesteads have weapons to deter invaders, while herders often carry guns to protect their animals because there is barely any police presence.

Arms smuggling is common and Kenyan police have little control over weaponry crossing the porous border to the north.

The region is awash with guns due to its proximity to unstable neighbours such as Somalia, where al Qaeda-linked militants have been fighting to topple the government.

Kenya’s north also borders South Sudan, which has suffered decades of civil conflict, and Ethiopia, where the armed Oromo Liberation Front has made sporadic incursions into the country.

In similar clashes in the other end of Kenya, more than 100 people were shot, hacked and burnt to death by armed raiders in the coastal county of Tana River in September.

— James Macharia is Reuters’ acting bureau chief for Eastern Africa, based in Nairobi.

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