The recommendations come from a task and finish group set up by the Welsh Government and form part of a report on charity rate relief which was led by Brian Morgan, professor of entrepreneurship at Cardiff Metropolitan University, and published by the Welsh Government on 23 April 2013.
Charities occupying retail premises of higher rateable values could also be subject to a reduction in relief rates under the proposals set out in the report.
The report recommends that 80% rate relief should continue to be available on retail properties with a rateable value of up to £12,000, and all charity shops should receive 80% rate relief on the first £12,000 of their premises’ rateable value.
Rate relief would then be reduced to 50% on the next £24,000 of rateable value, and reduced to zero for properties with a rateable value above £36,000.
Further recommendations include giving power to local authorities to ‘zone’ or limit the number of charity shops in retail areas.
The report has already attracted criticism from the Charity Retail Association which has called an emergency summit with its Welsh member organisations to discuss the impact of the proposals.
Warren Alexander, Charity Retail Association Chief Executive, said: “If adopted these recommendations will constitute a new tax on charity by the Welsh Government. Charity shops are raising vital funds for services, helping the Welsh Government meet its recycling targets, supporting local high streets and providing jobs and volunteering opportunities for people in Wales. They receive a relatively small business rate relief subsidy to do this: an estimated £3.4 million compared with £75 million for small businesses.
“We are dismayed that, despite our attempts to engage with Professor Morgan and make positive suggestions to address issues raised by them about charity shops, the final report appears to have gone even further than expected in restricting charity shops in Wales, regardless of the evidence available about what is causing high street decline or what impact this will have on Welsh communities. High street decline has been happening for many years, mainly because of the huge rise in internet retailing and out-of-town shopping centres – not because of charity shops.
“We are at a loss to understand why charity shops are being targeted in this way and today are writing to the Minister to ask whether she will attend an emergency meeting with our members.”
WCVA Chair, Win Griffiths, expressed sympathy with the concerns of the Charity Retail Association, saying: “Public sector support of the third sector in Wales has decreased by approximately £100 million over the last five years.
“Demand for third sector services is rising due to the impact the current economic situation is having on many people’s lives, so it’s been imperative that charities are able to continue to raise funds independently of government.
“These recommendations would harm the ability of many organisations to deliver these services and weaken a sector that has already experienced significant funding cuts.”
The Welsh Government is consulting on the recommendations of the report and the deadline for comments and feedback is 19 June 2013.