It has held meetings with business leaders around the country to try to build a consensus in favour of settings rates locally through partnership agreements between councils and business groups.
Local control was removed by the Conservative government in 1989.
In a discussion paper Working with business to enhance local prosperity, the association argued local rates would give councils an incentive to encourage commerce.
He pointed out the Confederation of British Industry said local councils and businesses were important to each other's success.
But Sir Sandy said: 'Our currently centralised system for funding local government undermines the incentive to develop this important relationship, by preventing local flexibility and stifling local creativity.'