The taxes were projected to raise 346.7 billion shillings ($2.7 billion), equivalent to 1.9 percent of GDP, and reduce the budget deficit from 5.7 percent to 3.3 percent of GDP.
The presidency on Tuesday announced the removal of proposed levies on bread purchases, car ownership as well as financial and mobile services, prompting a warning from the treasury of a 200-billion-shilling shortfall as a result of the budget cuts.
"We have changed tack. Today we will be in colourful and defiant clothing to avoid a repeat of them arresting everyone in black," said an organiser of the march, who requested anonymity fearing reprisals.
Kenya is one of the most dynamic economies in East Africa but a third of its 51.5 million people live in poverty.