Canada Deciding to Forgo the Penny? |
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| By Drew Cassels |
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| It is said that a person might be 'penny wise and pound
foolish', but Canadians might soon have to seek their wisdom
elsewhere. The Canadian Senate Committee on National Finance has just recommended that the government stop minting pennies “as soon as practicable”. After ending production of the penny, the Committee suggests taking the penny out of circulation a year later. The Committee says the penny costs too much to mint and is worth too little. It costs 50 per cent more to create a penny than what it has as a face value. CBC News reports that a Royal Canadian Mint survey released in October 2007 indicates that 63 per cent of small retailers are in favour of getting rid of the penny, insisting that efficiency is the prime motivation. The new process would affect only cash transactions; electronic purchases, such as through credit cards and debit cards, would would continue as they are now. Could Swedish Rounding Replace the Penny? In addition to recommending the end of the penny, the Committee on National Finance also wants guidelines established for a method of rounding prices during transactions. Canada could take a play from the book of Australia and New Zealand, two places where pennies are already gone. In Australia, cash transactions are rounded to the nearest five cents, following a technique known as “Swedish rounding”. This method was first introduced in Sweden in 1972 when the country removed the one and two öre coins from circulation. Australia has fairly basic rules for Swedish rounding. Prices that end in 0 or 5 would remain the same - no change. The rounding takes place for prices that end in other numbers. Prices that end in 1, 2, 6, or 7 are to be rounded down the nearest multiple of 5. Other prices, ending in 3, 4, 8, or 9 are rounded up to the closest multiple of five. The increased use of electronic payment – including %LINK2% and debit card transactions – pennies have lost value quite quickly. All the credit card use has contributed to inflation, rendering the penny long ago outliving its usefulness. This isn’t a done deal, though. At this point, the Senate Committee has only made the suggestion to end penny production. The recommendations of the Senate Committee still must be debated. So far, the plan of getting rid of the penny in Canada is still under review and possible procedures for conducting cash transactions are being investigated. However, with retailers pushing for taking the penny out of circulation, it is very possible that we will experience the death of the penny reasonably soon. |
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