TORONTO—Few coins get treated with the indifference of a penny. Left to collect in drawers and thrown in coffee cans, they amass a forgotten fortune that the Royal Canadian Mint has to replace annually—only to be forgotten again.
Australia and New Zealand have already dropped their one-cent coin and the United States has also looked into it. Now Canada is doing the same with a Senate committee examining the issue.
Those in favor of getting rid of the penny say it is worthless and a nuisance. Those who want to keep it worry about prices going up.
The Toronto Star reports that government documents show Canadian officials have looked closely at the fallout that followed the end of the penny in New Zealand and Australia, where both countries cut the coin.
Australia assessed that dropping the penny had negligible effect on prices. Register totals are rounded to the nickel or dime for cash payments while electronic purchases are still made to the exact cent.
The change, if it happens in Canada, is not expected to affect inflation, Pierre Duguay, deputy governor of the Bank of Canada, told the Senate National Finance committee in May.
He said consumers and merchants would share the wins and losses depending on how prices were rounded at the till.
“On balance it evens out,” he said.
Pennies are also blamed for weighing down productivity and taking up the time of cashiers, bank tellers, and others who handle them.
New Democratic Party Member of Parliament Pat Martin tabled a bill in 2008 proposing to eliminate the coin. He estimated the cost to the Canadian economy at $100 million-$150 million (approximately US$95.5 million-$143 million) each year in lost productivity. Others have pegged that cost at $220 million a year.
Martin also calculated that the cost to produce and transport pennies could be as high as 4 cents per coin, which makes little economic sense.
By the Mint’s estimates, there are 28 billion pennies in Canadian pockets, jars, and drawers. Last year, 1 billion coins were needed for circulation but because of penny-hoarding, the Mint had to produce nearly 500 million new coins.
Twice in the last decade, 2002 and 2006, bills have been introduced to U.S. Congress to do away with the penny. Both died when Congress adjourned.
Public opinion
A report prepared for the Mint on the issue in 2007 found businesses favored cutting the coin while it was a toss up for consumers who only slightly preferred going penniless.
Young people were most opposed to the penny’s removal, but not by much—35 percent were against removal, 25 percent were for, and 39 percent were indifferent. Those 25 and older favored removal.
Since the penny was introduced in 1908 it has lost half its weight from 0.2 ounces to 0.08 ounces, and shrunk in size from 1 inch across to 0.75 inches. It has also gone from being made of copper to steel with copper plating.
The Senate finance committee has yet to release a report on its study of the penny.
Australia and New Zealand have already dropped their one-cent coin and the United States has also looked into it. Now Canada is doing the same with a Senate committee examining the issue.
Those in favor of getting rid of the penny say it is worthless and a nuisance. Those who want to keep it worry about prices going up.
The Toronto Star reports that government documents show Canadian officials have looked closely at the fallout that followed the end of the penny in New Zealand and Australia, where both countries cut the coin.
Australia assessed that dropping the penny had negligible effect on prices. Register totals are rounded to the nickel or dime for cash payments while electronic purchases are still made to the exact cent.
The change, if it happens in Canada, is not expected to affect inflation, Pierre Duguay, deputy governor of the Bank of Canada, told the Senate National Finance committee in May.
He said consumers and merchants would share the wins and losses depending on how prices were rounded at the till.
“On balance it evens out,” he said.
Pennies are also blamed for weighing down productivity and taking up the time of cashiers, bank tellers, and others who handle them.
New Democratic Party Member of Parliament Pat Martin tabled a bill in 2008 proposing to eliminate the coin. He estimated the cost to the Canadian economy at $100 million-$150 million (approximately US$95.5 million-$143 million) each year in lost productivity. Others have pegged that cost at $220 million a year.
Martin also calculated that the cost to produce and transport pennies could be as high as 4 cents per coin, which makes little economic sense.
By the Mint’s estimates, there are 28 billion pennies in Canadian pockets, jars, and drawers. Last year, 1 billion coins were needed for circulation but because of penny-hoarding, the Mint had to produce nearly 500 million new coins.
Twice in the last decade, 2002 and 2006, bills have been introduced to U.S. Congress to do away with the penny. Both died when Congress adjourned.
Public opinion
A report prepared for the Mint on the issue in 2007 found businesses favored cutting the coin while it was a toss up for consumers who only slightly preferred going penniless.
Young people were most opposed to the penny’s removal, but not by much—35 percent were against removal, 25 percent were for, and 39 percent were indifferent. Those 25 and older favored removal.
Since the penny was introduced in 1908 it has lost half its weight from 0.2 ounces to 0.08 ounces, and shrunk in size from 1 inch across to 0.75 inches. It has also gone from being made of copper to steel with copper plating.
The Senate finance committee has yet to release a report on its study of the penny.
