The Victorian Opposition and minor parties including the Derryn Hinch's Justice Party had tried to amend the government's new tax, by limiting it in regional areas. The changes put forward included limiting the new tax to being no higher than the metro Melbourne Growth Areas Infrastructure Contribution (GAIC) tax.

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However, it fell short on votes on Thursday night and the windfall gains tax passed.

Urban Development Institute of Australia, Victoria, CEO Matthew Kandelaars said on a per hectare basis, the GAIP tax added about $110,000 to every hectare but the windfall gains tax would add $250,000.

He rejected the state government's rationale that the tax was aimed at stamping out land banking.

"They are conflating developers with speculators. Developers buy land to develop - that's where they make their margins,'' he said. "If you buy land and do nothing with it and sell it at 10 times the cost then that's speculating and that's one thing - but it's not developing."

The Treasury has defended it as an efficient and targeted way of capturing a fair share of the profits that occur when land is rezoned and its market value rises.

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Mr Kandelaars said the tax would hurt affordability and render many local housing projects unviable, costing regional Victoria at least 2700 new homes and more than $2.7 billion in lost economic output.

"It will disproportionately hurt regional cities like Bendigo, with tax liabilities in the regions likely to be the equivalent of more than twice that of Melbourne."

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