ONTD Political

Canadian Penny Killed in Canada

2:37 pm - 03/29/2012

OTTAWA -- There may still be pennies from heaven, but they won't be coming from the mint much longer.

The humble one-cent piece is set to disappear from Canadian pockets, a victim of inflation.

Thursday's federal budget said the Royal Canadian Mint will strike the last of the little coins this fall.

The budget says the cost of minting a penny has risen to 1.6 cents or $11 million a year. Its purchasing power has fallen to a 20th of its original value.

"Some Canadians consider the penny more of a nuisance than a useful coin," the budget documents said.

And so the coin will go the way of the old 25-cent shinplaster.

"The penny is a currency without any currency in Canada,'' Finance Minister Jim Flaherty said at a news conference.

It's nothing but a nuisance for business, he added.

Pennies will still be legal tender, but as they slowly vanish from circulation, prices will have to be rounded up or down.

If the customer has the pennies, they can use them. Payments with debit or credit cards or cheques can also be to the penny. But if the customer is paying cash and doesn't have the pennies, the total will go up or down to the nearest nickel. For example, $1.02 will become $1 and $1.03 will be $1.05.

The budget said experience in other countries that have dropped low-denomination coins suggests that rounding will be fair and there will be no impact on inflation.

As for those jars, boxes and bags of pennies sitting in countless drawers across the country, the government suggests people donate them to charities.

The penny has been under fire for years. New Democrat MP Pat Martin has introduced private member's bills over the years to kill it.

The disappearing penny will likely have little economic impact, but it may require some cultural adjustments.

And some old adages will likely fade away, too. Penny candy? A relic of the past. The penny arcade? Already gone. What are people going to pinch? Will thoughts now cost a nickel? See a penny? Leave it. Penny-wise? Just foolish. Take care of the nickels and the dollars will take care of themselves? A penny saved is...not much.

Source 

First post, so if I missed/misused some tags forgive me. D:

k0liverbby 29th-Mar-2012 11:07 pm (UTC)
the u.s. getting rid of the penny might cost us more in the long run, that's all i remember from the debates about it like 5 years ago

companies aren't gonna round down, they're not. Nothing is gonna go to 1.99 down to 1.95, they'll just increase it by a penny. Plus u gotta think about all the currency out now that would be devalued (sunk cost, shouldn't be factored anyway). Then it's more expensive to make nickels than pennies, so you'd have to put a lot more nickels into rotation. It might even cause a slippery slope effect of nickels becoming like pennies (doubt it). The benefit just hasn't outweighed the cost yet, but it might soon

Edited at 2012-03-29 11:08 pm (UTC)
theguindo 29th-Mar-2012 11:36 pm (UTC)
Nothing is gonna go to 1.99 down to 1.95

I disagree. The point of the 1.99 price is to make you see the 1 and think "oh it's only $1" and thus be more likely to buy it because your brain goes "1 out front = cheaper" even though it's really closer to $2 than $1. This tactic will still get used, because it works, so stuff will definitely end up being 1.95 instead of 2.00. The extra 5c they'd earn for rounding up is not worth much if people don't buy.
k0liverbby 29th-Mar-2012 11:38 pm (UTC)
i disagree full on. 2.00 is still a very clean number that most people don't have a problem with because most people round up anyway

like when i worked at a store that's mainly deal is 69.99 everyone said 'the glasses for 70 dollars'. Most people see through those .99 cents gimmicks anyway these days, they do nothing.
bmh4d0k3n 30th-Mar-2012 02:58 am (UTC)
I think it was originally to keep cashiers honest -- it would force them to open the register.
roseofjuly 30th-Mar-2012 05:38 am (UTC)
Actually, psychologically speaking that IS why many merchants kept the $1.99 thing even though the original reason is what bmh4d0k3n has said. Most people can consciously recognize that the price is $70, but unconsciously the $69.99 does things to them.
k0liverbby 29th-Mar-2012 11:40 pm (UTC)
and to add to it, most people would prob prefer the 2.00 bc it makes it that much cleaner to calculate tax. people who are trying to save are really big on what the real purchase will be AFTER tax
romp 30th-Mar-2012 12:47 am (UTC)
IA

As someone who has family members who tell me something costs $1 only to see it's actually $1.99, I know this works. *I* see $2 but not everyone does.
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