BILL Shorten is set to close tax loopholes that allow high income earners to use trusts to slash their tax bills in a move that could save $17 billion.

Fairfax Media reports that the new tax policy will be announced later today at Labor’s NSW conference where Mr Shorten will unveil a minimum 30 per cent tax rate on discretionary trust distributions for everyone over the age of 18.

The move will save $17.2 billion over ten years and put middle-income earners on a level footing with Australia’s top two per cent.

It is being pitched as a way to tackle Australia’s growing debt problem, which is set to pass half a billion dollars.

Discretionary trusts allow high-income earners to distribute money to those family members on lower incomes which reduces their own tax liability.

Labor says non-discretionary trusts such as special disability trusts, deceased estates and fixed trusts will not be touched and it will also not apply to farming or charitable trusts.