Canada ditching the penny; is US next?
It costs the Canadians 1.6 cents to produce a penny - about what it costs the US mint. Now Canada has decided to stop minting pennies as a means to save money.
Canada is ditching production of the penny, saying it costs more to make the coin than it's worth.
As of this fall, the Royal Canadian Mint will cease distributing Canadian pennies, though consumers will still be able to use them for transactions. The change was included in the country's 2012 budget released Thursday.
The budget calls the lowly penny a "burden to the economy."
"It costs the government 1.6 cents to produce each new penny," the budget says, adding the government will save about $11 million a year with its elimination.
Some Canadians, it says, consider the penny more of a nuisance than a useful coin.
Some retailers say they're worried about the change.
"Something that costs $7.99 looks cheaper than something that's $8," Wendy Butenschoen of Toronto's Essence of Life Organics told the CBC.
Rounding prices will become the norm as the penny is gradually removed from circulation, the budget says.
If consumers find themselves without pennies, cash transactions should be rounded to the nearest five-cent increment "in a fair and transparent manner," it says. Noncash payments such as checks and credit cards will continue to be settled by the cent, however.
It says fair rounding practices have been respected in other countries that have eliminated low-denomination coins. The removal of one-cent coins in other countries such as New Zealand and Australia, it says, did not result in inflation.
While there are some in the US who want to do away with the one cent coin, the American people seem to be overwhelmingly in favor of it:
In 2008 - back when the U.S. penny only cost 1.7 cents to make - then-Treasury Secretary Henry Paulson floated the idea of eliminating the coin, but it did not catch on. So far, the penny has seemed safe here in the States. Mark Weller, executive director of Americans for Common Cents, said that's not likely to change anytime soon, thanks to high public support for the coin. He also said the U.S. Mint is wrapping up explorations of making pennies - as well as nickels, dimes and quarters - more efficiently.
Just think of all the song lyrics we'd have to change: "Nickles from Heaven;" "Quarter Lane;" "The Dollar Arcade;" and how about "Dime Loafers" for a comfortable pair of shoes?
It would be a major cultural shift if we got rid of the penny. Luckily, it won't happen any time soon.