The economy of an independent Scotland would be helped by "fiscal fairy dust", according to the SNP economics spokesman.

Jim Mather also warned that an increase in income tax would be "naive" if the Scottish economy is to keep and attract knowledge workers - even though income tax bills would rise under the SNP with the replacement of council tax.

Labour, including Prime Minister Tony Blair, pounced on one of the election campaign's rare blunders, made during a media interview about Scotland's prospects under independence.

Labour's Wendy Alexander said the income tax admission had "holed the SNP's flagship taxation policy below the water line", and Tory deputy leader Murdo Fraser said it had "shot to pieces four weeks of careful Nationalist spin, confirming their sums don't add up".

The SNP claims its 3p in the pound local income tax would entail a large tax cut when compared with council tax bills, but Labour says it would make Scottish income tax the highest in Britain and drive people away.

By "fiscal fairy dust", Mr Mather suggested additions to a cut in corporation tax, such as an end to stamp duty on share sales, and altering tax law to attract investment funds.

An SNP spokesman claimed the Labour attack was "desperate and twisting comments out of context".

In the battle for business support, Jim Spowart, founder of Intelligent Finance, yesterday went public with his concerns about independence.

Appearing with Chancellor Gordon Brown, he said: "There's a big risk here and when we go into that voting booth it's very, very important that we put to bed once and for all this independence argument.

"We've been in a Union for 300 years which has done exceptionally well for people in Scotland and I don't see why a separate route would actually deliver something better."