As parliament returned on Tuesday, Treasurer Tim Pallas announced the government would introduce legislation to expand the vacant residential land tax to all of Victoria including regional areas.
At present, the tax only applies to vacant residential land in the inner and middle suburbs of Melbourne.
The change will take effect from January 1, 2025.
The tax will also be expanded to include vacant residential land that has been unimproved for five years or more in established areas of metropolitan Melbourne from January 1 2026.
"We can't afford really to have vacant land in metropolitan Melbourne sitting idle year-on-year," Mr Pallas said in a speech at a Property Council event on Tuesday.
"Our clear message to landowners is to either develop the land or sell it to someone who will."
State government agencies will also be asked to justify why they are holding vacant land rather than putting it back into the marketplace.
"We are not putting in place a rule for landowners that we as a state are not going to deploy to ourselves," Mr Pallas said.
It comes after the Victorian government last month announced an Australian-first, consumer-facing levy on short-term accommodation bookings with platforms such as Airbnb and Stayz.
The proposed 7.5 per cent levy was the only tax unveiled as part of Labor's long-awaited housing statement amid skyrocketing rents and weak supply.
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