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The issue of land is a critical one in post-Apartheid South Africa. Growing informality and poverty in urban areas, driven to a large extent by urbanisation, necessitates greater concerted action around land use management in urban areas to ensure more equitable, environmentally and socially sustainable use of finite land resources. The operation of the urban land market has been identified as a significant obstacle preventing the urban poor from accessing affordable land. A new approach, advocated by the UK Department for International Development and the Swiss Agency for Development and Cooperation entitled “Making Markets Work for the Poor—M4P” emerged in the 1990s. The M4P approach recognises that even successful market development will not distribute land to the poor and intervention in the land market is therefore required to promote more equitable land distribution patterns. The M4P perspective however has been accused of an obsession with economic solutions to the problem of landlessness and informality to the exclusion of other socio-political and legal remedies. The Brazilian case provides an example of a more progressive approach as it combines social policy and legal reform to regulate the use of urban land to ensure that land fulfils its “social function”. The presence of large tracts of vacant and unused land in cities is an important issue in the context of growing informality and competition for land and therefore requires urgent policy attention. The paper discusses the Brazilian case and the instruments used in that country to deal with vacant/unused land in cities. It argues that the progressive taxation of vacant land in cities could be a potentially valuable policy instrument in South African cities. Land-based fiscal instruments can be utilised by local government to manage the use of land and to access additional revenue which can be redistributed to the poor for the provision of infrastructure and services. Although these tools are not a panacea for challenges of informality and poverty in the developing world, they do have the potential to augment municipal income and to facilitate urban renewal, infill development and a more compact city. The paper argues though that these tools should be applied on a city-wide scale; part and parcel of an overall urban land reform strategy and plan for the city. [ABSTRACT FROM AUTHOR]