France also introduced a financial non-transactions tax last month

It's not just a 0.2 per cent Robin Hood tax which Hollande introduced.

France's recent deficit-busting raft of tax rises included a few measures specifically targeted at the financial markets. Not only was the country's Tobin tax implemented at double the expected rate, from 0.1 per cent of the value of financial transactions to 0.2 per cent, but a new tax specifically aimed at high-frequency trading was introduced.

The Tax Policy Center's Steven Rosenthal explains how it works:

The high frequency tax applies to traders that (1) use computer algorithms to determine the price, quantity, and timing of their orders (2) use a device to process these orders automatically, and (3) transmit, modify, or cancel their orders within half a second (the half a second has been set by draft administrative guidance). The high frequency tax is .01% on the amount of stock orders modified or cancelled that exceeds 80% of all orders transmitted in a month (under the draft administrative guidance). In effect, France now may tax orders that are not filled. It has created a “non-transaction” tax.

The move is interesting not just because it is the first time you can be taxed for not making a financial transaction, but also because it uses the tax system to achieve a goal which many would argue should be done through regulation or criminal legislation instead. The act of deliberately placing false orders in an attempt to manipulate the market is pretty clearly something which has no place in a healthy financial system, and yet the French authorities declined to attempt to ban the act.

Instead, they rendered it pointless by making it impossible to profit from. It's easier to enforce, harder to evade, and will make a bit of money for the government to boot. Seems win-win.

French president Francois Hollande goes for a walk. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Show Hide image

The NS Podcast #112: Going Underground

Are women-only carriages the way forward?

This week, we explain why we're backing Tessa Jowell as Labour's candidate for London mayor, talk women-only carriages on the tube, and speak to Tom Shone about Woody Allen. (Caroline Crampton, Barbara Speed, John Elledge, Stephen Bush, George Eaton).

You can subscribe to the podcast through iTunes here or with this RSS feed: https://audioboo.fm/channels/1814670.rss, or listen using the player below.

Want to give us feedback on our podcast, or have an idea for something we should cover? Visit newstatesman.com/podcast for more details and how to contact us.