Thu. Mar. 29 2012
Yet another step towards a cashless society….
OTTAWA — It’s the end of the line for Canada’s humble penny.
The government has decided our lowest denomination coin is more trouble than it’s worth, so the Royal Canadian Mint will stop distributing the penny this fall.
“It’s a currency without currency,” Finance Minister Jim Flaherty said Thursday.
In his budget speech, he said the only surprise is that the penny survived for so long.
“Pennies take up too much space on our dressers at home. They take up far too much time for small businesses trying to grow and create jobs,” he said in prepared remarks.
“It costs taxpayers a penny-and-a-half every time we make one. We will, therefore, stop making them.”
Cash transactions will soon be rounded to the nearest five-cent increment. So if a coffee costs $1.27, it will be rounded down to $1.25. If it’s $1.28, the final cost will be bumped up to $1.30.
Round down: cash transactions that end in one, two, six or seven cents.
Round up: Cash transactions that end in three, four, eight or nine cents.
All cash transactions will be rounded on the final bill of sale, after taxes have been added. But transactions involving debit or credit cards, or cheques, will still be done to the cent.
So if you pay for that $1.27 coffee with a debit card, it won’t be rounded to the nearest nickel.
Unless you want to hang on to your pennies as collector items, the government says Canadians can continue to use them indefinitely. If you want to return them, you’re advised to roll up the coins before redeeming them at a financial institution.
Each penny costs 1.6 cents to produce, for a total of about $11 million per year. The penny’s worth has also been steadily eroded by inflation — it has retained one twentieth of its original value.
The government anticipates that cutting the penny could lead to fundraising drives where charity groups focus on Canadians trying to dump the often-maligned coin, and said it will collaborate with those groups.
Flaherty encouraged everyone to give their pennies to those in need.
“Free your pennies from the prisons of home, and those jars they’re in, and give them to charity,” Flaherty said.
The Conservatives say countries like Australia that cut their lowest coin did not see price inflation.
Countries that have or plan to eliminate their own version of the penny also include Britain, Norway and Switzerland.
Canada is also reducing the cost of manufacturing its other coins, by switching from metal alloys to plated steel cores. One- and two-dollar coins are the last to have their metal composition changed.
Canadians took to social media Thursday to celebrate and bemoan the penny’s demise. Many questioned why the penny story was dominating headlines amid much bigger budget cuts affecting Canadians.
Twitter and Facebook updates were rife with clichés — “penny for your thoughts,” “penny pinching,” and “my two cents” were frequently used.
More Facebook users were glad to see the penny disappear from their wallets and pockets.