Say Goodbye To The Canadian Penny
Most Americans are familiar with the Canadian Penny – especially in this part of the country: They tend to turn up in your loose change at the convenience store and then your bank won’t accept them. New legislation in Canada will reduce the amount of these coins you see.
Starting this fall, our neighbors to the north will no longer mint or distribute Canadian pennies. Instead, cash transactions will be rounded up, or down, based on what the final total is. Electronic transactions, meanwhile, will continue to include the cents. Canada estimates it will save the country C$11 million per year.
The pros and cons are many – and it’s something that the United States has debated for years. On one side of the coin (if you pardon the pun), it costs more than one-cent to make these pennies. [The cost of a Canadian penny is approximately one-and-a-quarter cent; The estimated cost of producing an American penny is roughly two-and-a-half cents].
In justifying their decision, the Canadian government pointed out that it costs more to make a penny than it’s worth — 1.6 cents per penny. Plus, they say, people often throw the pennies away, leave them in jars at home or sometimes decline to take them at all. Critics say it’ll lead to price increases or inflation. They also say there will be start-up costs to update technology to round whenever the transaction is paid for in cash.
Other economists, though, say it should have no net effect on prices — and any burst of inflation should be limited and temporary.
Coin collectors are lobby hard for the cent; These are often the “gateway” coin that most collections start with.
What are your thoughts?