RURAL landholders have responded with dismay and confusion to the Government's proposal to slug them with a $95,000/ha sales tax if they're brought within the new urban growth boundary.

The proposal forces anyone with more than 0.4ha to pay the tax if they sell, subdivide or develop their land.

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Large landholder Bill Laffan faces a $57 million tax bill if he attempts to sell his 600ha Beveridge property, north of Melbourne.

The 65-year-old cattle producer is just one of at least 2675 landholders that the Victorian Government has warned face paying the $95,000/ha vendor tax if their land is rezoned as part of a major review covering 50,820ha of rural land.

"It'll ruin us as our country is going to be the last to be developed because it's likely to be at the northern end (of the new growth boundary)," Mr Laffan said.

The 65-year-old fears that his family will have to wait for years before a developer is willing to pay the price needed to recover the new vendor tax.

"I'm 65, in my 12th year of drought, with just 350 head and no other income," Mr Laffan said.

For smaller landholders, such as Stephen Rizzolio, the tax has blocked the sale of his 2.2ha block and home.

"I put it on the market two months ago, but as soon as the agent told people about this tax they just walked away," Mr Rizzolio.

"It's frozen my asset, because it's added $200,000 to the price for nothing."

Like many landholders, Mr Rizzolio has sought legal advice on who is responsible for paying the tax.

He said some lawyers were advising it applied to the person whose name was on the title when the legislation imposing the tax was proclaimed, while other solicitors were advising it was back-dated to apply to the person whose name was on the title on December 2 last year.