A proposal to limit tax relief on charity shops in Wales to 50 per cent would put hundreds of charity shop jobs at risk, according to the Welsh Council for Voluntary Associations and the Charity Retail Association.
The proposal was one of several put forward by the Business Rates Review Task and Finish Group to the Welsh assembly in a report aimed at incentivising growth on high streets.
At present, charitable premises get 80 per cent mandatory rate relief, and the local authority can choose to offer another 20 per cent relief if it chooses.
The report also proposed introducing tighter criteria before premises qualify for rate relief, limiting the number of retail units eligible for charity relief and introducing measures to limit the maximum size of property a charity could receive rate relief for.
It says that clusters of charity shops on high streets are damaging other retailers and that there is some evidence of charitable occupation being used by owners of empty premises to avoid business rates.
But a joint statement from the CRA and the WCVA said the proposals would result in shop closures, which would threaten 700 jobs and 9,000 volunteering opportunities.
Wendy Mitchell, head of policy and public affairs at the CRA, said: "These proposals are bad for Welsh charities and for the Welsh economy. If they are agreed by the Welsh government, charity shops will undoubtedly close, which will create more empty shops and restrict the income going to Welsh charities."
Geoff Jones, enterprising communities officer at the WCVA, said: "Income from charity shops is an important way in which sector organisations can develop unrestricted income that will help them to become more financially sustainable."Business rates are currently a non-devolved policy, which means any changes introduced in Wales would have to be ratified by the government in Westminster.