The committee heard evidence from finance secretary John Swinney, who first proposed the levy in the draft budget.
The Scottish Retail Consortium (SRC) welcomed the committee's decision and called on the Scottish Parliament to follow suit when they vote in the coming weeks. SRC director Fiona Moriarty outlined her concerns over the proposed levy that would result in any store property valued at more than £750,000 experiencing a 35% increase in business rates.
"Members of the Scottish Parliament's Finance Committee made it clear they felt there were flaws with the proposed levy," she said. "How does this levy help smaller enterprises when the money it raises will not be dedicated to additional small business support or the regeneration of urban areas?"
The Association of Convenience Stores labelled the proposals as "clumsy" and "in need of significant improvement".