Why is the Gillard government so timid about the mining tax?

BIS Shrapnel has recently conducted a report (see here for coverage) that contends that the mining investment boom will continue for the next 5 years with total investment reaching $375 billion.

That's a lot of money. So why do we still not have a mining tax?

One can imagine the possibility that by the time the mining tax is ready to come in, the boom will be (temporarily perhaps) over, putting pressure on the government to abandon it. This could be the case even though a profits-based tax would be better for the miners than a volume-based tax during a downturn in prices. It's certainly not better for them when profits are high, but that's the whole point. The resources are non-renewable and the profits made from selling them overseas should be more equitably shared.

We can only imagine what could have been achieved if we had had a profits-based mining tax for several years, not only in terms of productive government expenditure in infrastructure, but in the ability to reduce taxation for those industries facing difficulties in the patchwork economy.

Warnings by the mining sector about the negative impact of the carbon tax and the potential mining tax on future investment are bunkum.