A key committee of the Scottish Parliament has sharply criticised a proposed Scottish Government Bill to reduce rates relief to struggling businesses, saying that the proposed reform of Empty Property Rates Relief lacked supporting evidence, had been produced without proper consultation with the market, and lacked clarity on the £18 million savings to the Scottish Government that changes were expected to make.

The Scottish Finance Committee report said: "The figure of £18m appears to be based on a range of assumptions and therefore subject to a margin of uncertainty. The same detail [used for council tax calculations] has not been provided in respect of the empty property relief proposals."

One of the report's most damning passages even suggested that the measure could be counter-productive: "[While the committee] supports the general principle of the Bill's objectives of bringing back into use empty commercial properties, it is concerned that the Bill's proposals may impact detrimentally both on individual businesses and the broader economy."

Known by its critics as "a tax on distress", the measure unveiled by Cabinet Secretary for Finance John Swinney in September last year is intended to come into force in 2013. It forces owners of unoccupied commercial property to pay, after a phasing-in period, 90% of the non-domestic rates for all but the smallest premises. At present rates on empty properties attract only 50% of the full rate.

Effectively a subsidy to business, the relief costs the Scottish Government an estimated £152m a year, making it the costliest of all the non-domestic rates relief schemes in operation.

Conservative committee member Gavin Brown MSP said that the committee's criticism reinforced the case for a rethink on the proposed new Bill, which is intended to encourage landlords to release empty property at reduced rates.

But business groups and companies have objected that because most properties are empty because of the ill-effects of the recession, the ending of the relief will only add to pressure on struggling landlords.

Brown said: "The draft legislation is entirely the wrong prescription at entirely the wrong time. Most people who have empty commercial properties want to rent them but there is a simple lack of demand. The SNP want to punish people who hold properties to balance their own books and the most staggering thing of all is the policy memorandum doesn't contain any suggestion or estimate about how many properties would come back onto the market.

"They should scrap this part of the legislation as soon as possible."

The unusually strong adverse reaction to the proposed legislation, formally known as the Local Government Finance (Unoccupied Properties etc) (Scotland) Bill, turns the spotlight onto Local Government Minister Derek Mackay MSP and Housing Minister Keith Brown MSP, who will jointly appear before the Local Government Committee next week to answer the report's criticism of the Bill's "financial memorandum" raised in last week's report.

The report follows a bruising evidence session earlier this month when the Scottish Government's head of local government policy, Marianne Cook, received a dressing down from the SNP-dominated committee for the vagueness of her responses to questions, particularly her comment that "the incentive – we hope – might start to work and encourage properties back into use".

In his summing up on the evidence, SNP MSP Kenny Gibson, the finance committee convener, said: "The word 'hope' should really not be used in connection with a financial memorandum. Surely it should be based on something a wee bit more robust than that. I know that you do not have the evidence, but surely you should have something more than this. As it is drafted, this financial memorandum seems to me to be just a shot in the dark."

Cook also claimed the measure was supported by the Federation of Small Businesses, a claim that the FSB denied.

Colin Borland, head of external affairs for the FSB, said the small business trade organisation supported a detailed review of the current regime, not the Scottish Government's proposed changes. He told the Sunday Herald: "It is flattering when people draw you in to support them into their argument, but the fact is that we don't know how the changes would affect something as complex as the commercial property market and we have called repeatedly for a thorough examination."

David Lonsdale, deputy director of CBI Scotland, said: "In highlighting the lack of any evidence behind the Government's assertions that the measure will improve occupancy rates, the Committee of MSPs has unmasked the Bill for what it is – a £18m a year tax on distress – as companies rarely leave premises empty by choice, especially when they don't generate an income."