A PROMINENT SNP Holyrood hopeful has been accused of peddling “fantasy economics” after arguing an independent Scotland could “literally create money” instead of levying taxes.

Osama Bhutta, a former aide to Alex Salmond and the cousin of Justice Secretary Humza Yousaf, said the idea the state needed tax revenue to spend “isn’t correct”.

He said: “Once we have our own currency, we will have the ability to create money and spend it on the things that are needed.

“The state literally creates money. It does not need our money.”

Mr Bhutta, 40, a former communications director at Amnesty International who says politicians are “turbo-charged merchants of deep solidarity and empathy”, is challenging MSP Kenny Gibson for the SNP candidacy in Cunninghame North for next year’s election.

He stood for Westminster in Glasgow Central in 2010 as Osama Saeed, when his candidacy was dogged by financial controversies.

Interviewed by pro-independence outlet Skotia Media, Mr Bhutta was asked if he backed raising taxes on the wealthy in an independent Scotland, and said: “Taxes are important in creating equality.

“But I do subscribe to the view that, when it ends up being a dichotomy of taxation or not, and the idea that the state needs taxes in order to spend, that isn’t correct.

“I know once we have our own currency we will have the ability to create money and spend it on the things that are needed.

“That’s where the UK has completely stalled ever since austerity measures came in, and you can argue it even further back than that

“There’s been this fetishisation of, ‘What is the deficit?’

“That’s to the detriment, it’s a downward spiral, and that’s what we’ve seen over many years.

“My hope would be that once we have an independent country we’ll do things in a different way, and there seems to be much more of a consensus emerging in many parts of the world about the nature of economics not being about tax and spend, but more being about the state literally creates money.

“It does not need our money. But the people need the state’s money.”

He went on: “We’re going to need all sorts of industry creation once we have a new country. That’s going to need money, and it literally will mean that we’ve got to create it.”

In the same interview, Mr Bhutta was asked why he wanted to be an MSP. He replied: “I don’t know actually. It just kind of came about.”

He offers a different rationale in a video on his campaign website.

In it, he says he is “thinking of running for parliament because elected representatives are turbo-charged merchants of deep solidarity and empathy”.

Mr Gibson, who has been an MSP since 1999 and the MSP for the Cunninghame North seat since 2007, is also being challenged for the candidacy by former Ayr MP Corri Wilson.

He has been backed by health secretary Jeane Freeman and local MP Allan Dorans.

In February 2010, Mr Bhutta was at the centre of a cash-for-access row when Alex Salmond and Nicola Sturgeon auctioned lunches at Holyrood to raise funds for his campaign.

Mr Yousaf was the auctioneer at an event which raised more than £11,000, only for Mr Salmond and Ms Sturgeon to cancel the lunches after a backlash at parliament.

Mr Bhutta was the also the founder and chief executive of the Scottish Islamic Foundation, a lobbying group set up in 2008 with £400,000 of grants from the SNP Government.

It promised to hold the country’s biggest ever celebration of Islamic culture in Glasgow in June 2009, but the project collapsed, as did a second scheme a few months later.

Ultimately, half the £400,000 grant was withheld or repaid.

Mr Bhutta quit as chief executive in March 2010, just three days after a damning auditor’s report showed the Foundation going broke amid inadequate record keeping.

The Foundation, which included Mr Yousaf as a director in 2008 and 2009, was finally wound up in 2013 with almost nothing to show for £200,000 of public money.

READ MORE: Islamic lobbying group with links to SNP faces closure

Mr Butta is one of several would-be MSPs close to Mr Yousaf.

The Justice Secretary’s wife, SNP activist Nadia El-Nakla, is vying for a party candidacy in North East Fife, currently held by Liberal Democrat leader Willie Rennie.

Mr Yousaf’s former assistant, North Lanarkshire Councillor Junaid Ashraf, is also challenging sitting MSP James Dornan in Glasgow Cathcart.

Pamela Nash, chief executive of Scotland in Union, said: “SNP figures must stop engaging in fantasy economics.

“Voters deserve honesty about the reality of leaving the UK and answers from the SNP about what public services would be cut and how much taxes would go up by.

"A new currency is not a licence to print cash - it’s a recipe for putting wages, mortgages and savings at risk.

“By remaining part of the UK we can focus on rebuilding our economy backed by the strength of the pound.”

Mr Bhutta responded: “US Federal Reserve chief Alan Greenspan once said: ‘There’s nothing to prevent the government from creating as much money as it wants and paying it to someone.’

“This has been expanded upon by economists like Stephanie Kelton and Richard Murphy.

“We need a mindset shift from the Thatcherite ideology that taxes are the source of a state’s money - they aren’t.

"That eventual tax money is created by government in the first place, and they choose how much - or in the Tory case how little - to create.

"If we get this right, an independent Scotland with its own currency could instead prioritise creating as many green jobs as we can as long as we monitor inflation carefully.”