Former Labour leader Wendy Alexander has unveiled beefed-up "Calman-plus" proposals that would allow the Scottish Parliament to borrow enough money to pay for the new Forth road bridge and other major building projects.
A special committee of MSPs said a range of proposed new powers for Holyrood in the Scotland Bill should go further than currently planned.
The Scottish Government should be able to borrow up to 5 billion, double that currently earmarked in the bill, while new powers over welfare reform and council tax benefit could also be devolved.
Ms Alexander chaired the committee looking into the proposals of the Scotland Bill, which was based on the recent findings of the Calman Commission into the devolution settlement ten years on.
The committee report won the backing of business leaders, but met criticism from supporters of greater fiscal autonomy that it did not go far enough.
"I believe that these powers could help the next Scottish Government pay for the new Forth road bridge or fund a major housing programme," Ms Alexander said yesterday.
"We are now taking the next steps on a journey with new financial powers and responsibilities which will provide ministers with the tools to invest in our future."
MSPs on the committee are recommending that the bill be approved. Scrutiny of the legislation will be taken over by MPs at Westminster, where the bill will be passed in its final form.
• Eddie Barnes: Declaring Calman reforms inadequate opens political pitfalls on all sides
The key recommendation is that the Scottish rate of income tax should be effectively cut by 10p in the pound, with Holyrood empowered to make up the difference by imposing such tax as it sees fit. The Scottish block grant would be cut.
But while the Scotland Bill says all taxpayers would be affected uniformly, the committee says consideration should be given to handing MSPs the power to change the higher rates of tax independently in future.
The tax reforms have been widely rejected by the SNP, which says they will mean Scotland will lose out.
External affairs minister Fiona Hyslop said: "The committee's report has not examined seriously the issues this country faces: economic growth, jobs, poverty and benefits, the environment, energy.
"The Scotland Bill does little or nothing to equip the Scottish Parliament to address these issues."
The Crown Estate, which owns and manages vast areas of land and Scottish waters, should become more accountable to Scotland and possibly devolved, according to the committee.Corporation tax could be handed to Holyrood in the future, according to the report, which also calls for the aggregates levy and air passenger duty to be devolved.
And although the Scotland Bill does include powers to create new taxes in Scotland, such as a landfill tax and a graduate tax, the MSPs say a "formal assurance" should be sought from the UK government that it will not withhold this power unreasonably.
The borrowing powers would relate to capital projects such as the Forth road bridge, which is predicted to cost about 2 billion. The report yesterday said the money could be borrowed by going direct to money markets and issuing bonds.
Scottish Secretary Michael Moore welcomed the committee's key recommendation that the bill be approved.
"Each element of the bill has been rigorously scrutinised by the committee and I am pleased the bill has been tested so thoroughly," he said.
The report has been welcomed by the Scottish Chambers of Commerce (SCC) after initial concerns that many businesses felt isolated.
SCC chief executive Liz Cameron said: "We support the view that capital borrowing thresholds should be extended significantly in order that Scotland's infrastructure can be brought up to modern and effective standards."
The committee's evidence sessions were marked by an angry disagreement with two academics, Professor Andrew Hughes Hallett and Prof Drew Scott, who endorsed greater fiscal autonomy, and claimed they were the subject of unfairly harsh criticism.
Prof Scott branded the report "remarkably complacent" yesterday.
He added: "Scotland is facing unprecedented economic challenges in the coming years which will require greater fiscal powers than are provided for in this flawed bill if they are to be tackled. This is a missed opportunity."