Finance Minister Mairtin O Muilleoir believes the rates overhaul will help regenerate the Northern Ireland economy

A radical re-think of rates has been unveiled by Stormont's Finance Minister.

Mairtin O Muilleoir said his package of measures aimed to modernise the commercial and domestic rating system and stimulate the Northern Ireland economy.

He said: "The package constitutes the biggest shake-up in rating policy in a generation, and signals my commitment to a tax system that is fair and that supports prosperity.

"My aim in setting out these proposals is to ultimately arrive at a refreshed, fit-for-purpose rating system in which citizens and commercial ratepayers contribute, according to their ability, to funding the building of a modern, inclusive, exemplary society.

"I also intend to ensure that rates act more as an economic spur. The rates system should encourage regeneration, investment and entrepreneurship, and at the same time discourage dereliction and decline."

Replacing the Small Business Rate Relief Scheme with a new £22 million investment in small retail and hospitality businesses is among the big ticket items on the minister's list of changes.

The proposed scheme, likely to run for three years, would give up to 40% support to 13,000 businesses, including shops in provincial towns which previously missed out.

However, some 10,000 miscellaneous properties, such as offices located above shops, would not be eligible for relief.

The Minister said an academic evaluation of the Small Business Rate Relief Scheme, which was introduced in 2010 to provide temporary respite from the recession, found it had served its limited purpose and contributed little to economic growth.

Two pilots to regenerate deprived areas of east and west Belfast have also been put forward.

The so-called Business Empowerment Zones will begin in the lower Newtownards and lower Falls Roads and will provide special rates relief to encourage business and investment.

Mr O Muilleoir said: "Having worked extensively in both areas I know that the will is there to transform these key arterial roads - and that a small amount of investment can now reap dividends for years to come."

If successful, similar schemes may be trialled in a rural area, the minister said.

Meanwhile, among the more controversial measures is the reduction in support for charity shops which may be charged up 10% or 20% rates.

"We cannot have our high streets just made up of charity shops," added Mr O Muilleoir.

Increasing the empty property rate from 50% to 75% and removing the initial exemption period of three months has also been hailed as a potential revenue raiser for the Stormont Executive and district councils.

The Minister said: "It is my view that this will encourage the letting of empty properties and increase economic activity."

Lifting the rates exemption for empty factories has also been suggested.

Radical reform of the domestic rating system includes scrapping the £400,000 cap, the Assembly was told.

This is likely to affect up to 7,000 householders, including many in the Minister's affluent South Belfast constituency.

However, mitigations to protect those deemed asset rich but income poor will be put in place.

Mr O Muilleoir said: "The application of the £400,000 cap means that those in houses with a higher value pay proportionately less than those in middle or lower value homes.

"This to me is inherently unfair; take Bill Gates' house. He pays $1 million a year in property tax on his $100 million Washington State home. If he lived here it would cost him less than $5,000 a year."

It has also been proposed to develop a derelict property levy and some 1,800 problem properties have already been identified.

Other changes include removal of the early payment discount; re-opening the low carbon new homes scheme and reducing the landlord allowance.

A new non-domestic revaluation exercise could also take effect in 2019.

Mr O Muilleoir said: "All in all the changes I have put forward are driven by a need to increase the fairness of the system by ensuring that those who can contribute, do so and that the tax burden is broadly shouldered.

"The package of bold proposals set out establishes a solid basis for developing a modern rates system that is fair, that revitalises our city and town centres, spurs growth in our high streets and that supports prosperity."

The plans will be put out for an eight-week public consultation before being brought before the Executive and Assembly for approval.

DUP MLA Emma Little Pengelly, who chairs the finance scrutiny committee said: "I welcome the statement although some will create concern within the constituency particularly around the domestic cap."

She also asked the minister to commit to coming before the committee to outline his thinking in more detail and ensure that the proposals were brought before the Executive.

The Alliance Party's Stephen Farry said he gave "credit" to the Minister for setting out a "very ambitious agenda" but cautioned against sending out mixed messages.

"Given the current ongoing deadlock around the transfer of regeneration powers to councils is there not a danger that we are actually sending from the Executive a very mixed and indeed contradictory, incoherent approach to how we would best regenerate our towns and cities across Northern Ireland," he said.