REFORMING business rates would be the best tax tweak possible for small businesses in Wales, a industry group has said.

The Federation of Small Businesses Wales (FSB Wales) met in Swansea to come up with ideas on changing the tax system to present to the Commission on Devolution in Wales.

Members felt there were pros and cons for reforming the system, but that reducing business rates could have a particularly positive effect.

Business rates are a property tax paid on non-domestic properties, and are the means by which businesses contribute towards the costs of council services.

In Wales they are worked out in part by a UK body and in part by the Welsh Government, which is also able to set business rate relief.

The revenue is paid into a Welsh Government pot and then re- distributed back to councils to spend on services.

Swansea councillor and city centre ambassador Richard Lewis said there was a widespread clamour for business rate reduction among Swansea traders.

A rise in business rates in the last couple of years, he said, had coincided with some very dismal trading conditions, eroding pro- fit margins.

Mr Lewis said this was particularly trying for independent shops.

"Most of the businesses are struggling," said the former Lord Mayor of Swansea.

"Business rates are one of the big things for traders in High Street."

The Lib Dem ward member for Gower said he has lobbied the Welsh Government to set up an enterprise zone, with lower business rates in High Street, Belle Vue Way and Orchard Street.

"I would say it is my prime motivation," he said.

A business rate "holiday" would also deliver results and perhaps encourage firms to take on empty units, he added, although this would mean less money swilling around the Welsh Government pot.

"Every business hopes that tomorrow will be better," he said.

"You work your socks off. We as a council are trying to help them."

According to the Welsh Government, 98 per cent of all business in Wales are "micro" and small businesses, meaning they provide very significant employment.

FSB Wales concluded that more tax powers for Wales would not necessarily result in economic improvement, due to added administrative burdens.

But it strongly felt that the Welsh Government ought to focus more spending priorities towards business.

And it said that everybody should share in Wales's natural bounty.

"Wales is rich in natural resources and should benefit from their extraction providing that this taxation is viable and would not negatively affect indigenous small businesses," said the FSB Wales report.

The group concluded that it broadly supported any proposal to give the Welsh Government greater fiscal autonomy.

But it added: "It should be noted that there remains still a degree of cynicism and indeed scepticism towards the institutions of devolution within Wales."

richard.youle@swwmedia.co.uk