The Scottish Retail Consortium (SRC) has thrown its weight behind new plans to allow local councils to vary business rates in designated areas.

The Scottish Parliament's local government and regeneration committee is currently consulting on giving local authorities "local discretionary relief" as part of a wider formal consultation on the Community Empowerment (Scotland) Bill, which seeks to rejuvenate down-at-heel areas by allowing derelict or abandoned land to be bought by community groups.

Under the proposed legislation, local authorities would be allowed to designate specified areas where businesses would be charged a lower rate than the nationally set poundage rate which is set annually by the Scottish Finance Minister.

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But trade body the SRC said the fact that no government funding will be made available to local authorities to offset any revenue losses makes it unlikely many councils will use it, as they will either have to absorb the loss of income or offset it by cutting spending elsewhere.

A possible solution to the funding gap proposed by the SRC would be for the Scottish Government to consider reintroducing the Business Rates Incentivisation Scheme (BRIS), which as the Sunday Herald revealed back in May, was effectively abandoned earlier this year.

The scheme - which was left unfunded by the Government for two years in a row after being unveiled in January 2012 - would have allowed councils to keep 50% of business rates brought in over official targets set by ministers.

In its submission to the committee, the SRC said that its members believed that Scotland's non-domestic rates system is no longer fit for purpose and is in need of fundamental reform.

SRC director David Lonsdale said: "The tax only ever rises, it is a disincentive to invest in retail or commercial premises and retailers pay around one-quarter of all business rates in Scotland which, next year, are set to generate £2.9 billion in total tax revenues."

As expected, the SRC has objected to a provision in the bill that would allow councils to increase rates bills through a local discretionary supplement.