Proposals have long floated around to eliminate the Canadian penny but recently a senate committee report recommends killing the penny. Note that we are not the only country to have this debate as New Zealand and Australia have already eliminated their pennies in 1990 and 1991 respectively and the United States have also had ongoing debates to eliminate the American penny.
Why remove the cent?
The penny actually costs 1.8 cents to manufacture; more than its face value. Just to manufacture the approximately 816 million pennies required every year it costs approximate $33 million. There is also a significant cost for the Royal Canadian Mint to distribute over 2000 tons of pennies across Canada. (PDF)
As well as the manufacturing and distribution costs, pennies add a burden to business in that they have to accept them and count them. In the United States it has been estimated that the extra time of handling pennies in transactions is worth more than $300 million.
As some have noticed, there is a hassle of having pennies and other change and have created machines to allow you to exchange change for bills. These machines often take a cut of the money (often 7-10%) although some banks are piloting free change machines.
How would I pay without pennies?
With the elimination of the penny, cash purchases would likely be rounded using the Swedish Rounding method which was used when Sweden removed their 1 and 2 Ã¶re coins from circulation. Basically, purchases ending in 1, 2, 6 or 7 are rounded down to the nearest nickel. Purchases ending in 3, 4, 8 or 9 are rounded up to the nearest nickel while purchases ending in 0 or 5 are left unchanged. Electronic payments such as debit, credit cards and cheques would be paid to the penny in the exact amount and no rounding would be necessary.
I haven’t seen any indication as to whether the House of Commons will follow the Senate’s recommendation and introduce a bill to get rid of the lowly brown cent or whether the recommendation will gather dust on a bookshelf as the value and usefulness of the penny keep dropping.
Personally I hope that they proceed to eliminate to eliminate the penny. My pockets will become a lot lighter; besides I haven’t seen penny candy available anywhere in a long time.