The Senedd has rubber stamped plans to cut business rates for about 13,000 smaller high-street shops in Wales, while raising the amount payable for higher-value properties.
Finance Secretary Mark Drakeford brought forward regulations to adjust the multipliers for business rates - officially known as non-domestic rates - for the first time from April 2026.
The Welsh Government will introduce a lower multiplier – a key determinant of bills – for smaller shops, kiosks, pharmacies and post offices with a rateable value below £51,000.
To offset the revenue lost from "bricks-and-mortar" shops, a higher multiplier will apply to about 3,200 bigger properties with rateable values of more than £100,000.
The higher multiplier would not apply to properties occupied by the public sector, including hospitals, surgeries, schools, colleges, museums, universities, courts and police stations.
But a consultation document warned it would not be possible to exclude more generic property types, such as office buildings occupied by public services.
'Unique challenges'
The value of the retail and higher multipliers will be set by ministers in separate regulations, taking into account a revaluation of non-domestic rates which is yet to be concluded.
In the Senedd on Wednesday, Prof Drakeford said more than half of business rate payers in Wales already benefit from £250m in permanent reliefs.
He told the Senedd: "A lower retail multiplier will be introduced to rebalance the non-domestic rates system in favour of small-to-medium-sized shops."
"This reflects the unique challenges faced by bricks-and-mortar retail shops – not least through their exposure to competition from online retailers."
Heledd Fychan, Plaid Cymru's shadow finance secretary, agreed with the need to tailor multipliers to relieve the tax burden on smaller, domestic businesses. She encouraged ministers to go further by including restaurants and pubs in the lower multiplier.
The South Wales Central MS reiterated her party's calls for a vacant land tax in an effort to revive high streets, with the UK Government so far resisting calls for further powers to do so.
'Status quo'
Prof Drakeford agreed: "There will be scope to do more...in future. To be clear, what these regulations do is to lay the scope for the use of these powers for the next financial year."
"The choice in front of the Senedd is not between this or more extensive use of the powers – it's between this and staying with the status quo and there will be no further opportunity to vote on wider use of these powers later in this Senedd term."
Senedd members unanimously backed the regulations.
Different systems already exist elsewhere in the UK.
In England, a lower multiplier applies to properties with rateable values under £51,000, and further lower multipliers for retail, leisure and hospitality properties are on the horizon.
According to the consultation document, the UK Government also plans to introduce a higher multiplier for properties with rateable values of £500,000 and above in 2026/27.
Scotland sets three differential multipliers and in Northern Ireland, a central rate is supplemented by a rate set by each district council.
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