Senate committee report recommends killing the penny

[GAP]

Senate committee report recommends killing the penny
Article Link
The Canadian Press

OTTAWA — The penny is in for a pounding.

The Senate finance committee is set to recommend Tuesday that Canada get rid of the lowly coin.

Sources say the committee has concluded that a century of inflation has eroded the value and usefulness of the one-cent piece.

The Bank of Canada says the copper-plated coin has lost 95 per cent of its purchasing power since 1908, when it was first produced in Canada.

It now costs more to produce the penny — about 1.5 cents each — than the coin’s actual face value.

The Royal Canadian Mint has been forced to sharply increase production of the penny in recent years as more and more Canadians hoard, rather than use the copper.

Finance Minister Jim Flaherty has mused in the past about doing away with the penny and his department has reportedly been studying the penny-free economies in Australia and New Zealand.

The Bank of Canada has also studied the potential inflationary impact of eliminating the penny and has concluded it would be negligible.

“On some transactions, the merchant loses and the consumer wins; on some, the merchant wins and the consumer loses,” Pierre Duguay, the bank’s deputy governor, told the Senate finance committee last spring.

“However, on balance it evens out.”
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[Neill McKay]

I'm not really in love with the idea of rounding prices, as has been suggested.  I think the public would be forever suspicious that they were getting jammed somehow (and not necessarily without cause).

A simpler solution might be to change to a 20-part or 10-part dollar.  The latter would be easiest math-wise: prices would still look about the same as they do now, but with one less figure.

 

[Edward Campbell]

I'm not really in love with the idea of rounding prices, as has been suggested.  I think the public would be forever suspicious that they were getting jammed somehow (and not necessarily without cause).

A simpler solution might be to change to a 20-part or 10-part dollar.  The latter would be easiest math-wise: prices would still look about the same as they do now, but with one less figure.

The Dutch have been doing without pennies for years decades. There were not, when I lived there, in the 1980s, any problems with rounding up and down. Maybe the Dutch are just smarter and more socially responsible than Canadians ...  :

 

[captloadie]

The Dutch have been doing without pennies for years decades. There were not, when I lived there, in the 1980s, any problems with rounding up and down. Maybe the Dutch are just smarter and more socially responsible than Canadians ...  :

Not true. You can still get 1 and 2 cent pennies here. But they do tend to round up at most places.

 

[Oldgateboatdriver]

That's why they "go dutch" on their bills.

 

[Neill McKay]

The Dutch have been doing without pennies for years decades. There were not, when I lived there, in the 1980s, any problems with rounding up and down. Maybe the Dutch are just smarter and more socially responsible than Canadians ...  :

There's no doubt that it can be done, but there's also no need to make things any more complicated than necessary.

I vividly recall various high school teachers contradicting each other on what to do with rounding a 5: one school of thought was that you always round up; the other was that you round up or down, whichever will yield an even number.  Now I know who was right, but the fact that there was a difference of opinion at all makes me think that there will be some confusion, if not outright hostility, at the cash register.  There are people who will argue over three cents.

 

[Kat Stevens]

3 cents on every transaction, multiplied by 30 million?  Seems pretty substantial to me.

 

[Neill McKay]

3 cents on every transaction, multiplied by 30 million?  Seems pretty substantial to me.

To be certain, whatever rounding scheme is adopted it will, in the long run, even out for all concerned.  But on a public policy question it's not enough to be right: you also have to appear to be right in the eyes of a very diverse public.

 

[Pusser]

The Dutch have been doing without pennies for years decades. There were not, when I lived there, in the 1980s, any problems with rounding up and down. Maybe the Dutch are just smarter and more socially responsible than Canadians ...  :

Haven't the Dutch gone to the euro?  I believe the euro does breaks down into 100 cents, so there would be pennies in the Netherlands again.

 

[SeaKingTacco]

I've been to penniless NZ and it works well there.

If you pay by credit card or debit, there is no rounding.

If you pay by cash, your price gets rounded to the nearest five cents.  It is very painless and over time, it works out.

I'm all for killing the penny.

 

[Oldgateboatdriver]

Quite right on the Euro thing for the Dutch.

Also: the only reason we need to round up, or down, would be taxes on sales. Otherwise, the stores can easily make all their prices change by increments of $.05. but if you then apply a 13% or 14% tax, you run into trouble. As this is the case, I would agree with getting rid of the penny if - by unchangeable law - stores were forced to have prices divisible by $.05 only and all amounts after taxes were only rounded down to the nearest lower increment of $.05 - with the government absorbing the losses each time.

 

[Neill McKay]

Also: the only reason we need to round up, or down, would be taxes on sales. Otherwise, the stores can easily make all their prices change by increments of $.05. but if you then apply a 13% or 14% tax, you run into trouble. As this is the case, I would agree with getting rid of the penny if - by unchangeable law - stores were forced to have prices divisible by $.05 only and all amounts after taxes were only rounded down to the nearest lower increment of $.05 - with the government absorbing the losses each time.

Not a bad argument for tax-inclusive pricing, actually.

 

[Pusser]

The problem with tax-inclusive pricing is that the government then gets to hide what they're gouging us for.

 

[McG]

Quite right on the Euro thing for the Dutch.

Also: the only reason we need to round up, or down, would be taxes on sales.

Don't forget gas prices. 
Of course, rounding already occurs where calculated gas prices or taxes amount to fractions of a cent.

Should we drop the penny?  I don't know.  Maybe we should introduce the 2 cent coin so that fewer pennies are needed, or maybe we should just go with 10, 20 and 50 cent coins?

... we can call the 10 cent coin a “deci” and (much like the current division of a dollar into cents) we would be blissfully oblivious to all rounding from lower than the first significant digit.

 

[Infanteer]

... we can call the 10 cent coin a “deci” and (much like the current division of a dollar into cents) we would be blissfully oblivious to all rounding from lower than the first significant digit.

Why wouldn't we just continue to call it a dime?

 

[George Wallace]

Why wouldn't we just continue to call it a dime?

You don't get "Promoting Change" ticked off if you do.

 

[McG]

Why wouldn't we just continue to call it a dime?

The coin itself would not need to be re-named.  However, if pennies, nickels and quarters were gone, then our smallest division of currency would no longer be $0.01 - it would be $0.1.  "Cents" would be gone and "decis" would be in.

If someone is going to make the effort to drop the penny, then why keep the cent as a significant digit in our currency?  We could just go with 10, 20 and 50 cent coins (or rather 1, 2 and 5 deci coins).

 

[runormal]

I would love to kill the penny. I never take them anyways when i am offered (from purchases), they are to small and you can't buy anything with them.

 

[Rheostatic]

Haven't the Dutch gone to the euro?  I believe the euro does breaks down into 100 cents, so there would be pennies in the Netherlands again.

Each Euro country still mints their own Euro coins, and those that don't use the 1 cent coin don't produce it. They still accept 1 cent coins from elsewhere in the Eurozone.

http://en.wikipedia.org/wiki/1_cent_euro_coins#Usage
http://en.wikipedia.org/wiki/Swedish_rounding

 

[Brad Sallows]

What is the material & production cost of a nickel or dime?  Pennies don't need to be copper or even particularly counterfeit-proof.