Does the Retirement of the Canadian Penny Make Cents?
Canada will one day be penniless — and that is exactly what the federal government wants to happen.
No, the Bank of Canada is not expecting the country to go bankrupt. Rather, it is eliminating pennies from its currency system.
Although May 4, 2012 was the last day on which the Canadian penny was minted, today is the last day it will be distributed — although with several billion of them currently in use, they are expected to be around in circulation for a little while longer.
The Canadian government expects to save $11 million per year by no longer minting the penny — which, ironically, cost 1.6 cents to produce. That makes a lot of cents to the Canadian government — but what about you?
Well, if you happen to be purchasing an item using cash in Canada and the total bill of sale — including any taxes — ends in a number other than one or five, what you will actually pay will be either rounded up or rounded down as follows:
- If the total bill of sale is $1.00, you pay $1.00 — nothing changes
- If the total bill of sale is $1.01, you pay $1.00 — you save one extra cent
- If the total bill of sale is $1.02, you pay $1.00 — you save two extra cents
- If the total bill of sale is $1.03, you pay $1.05 — you pay two extra cents
- If the total bill of sale is $1.04, you pay $1.05 — you pay one extra cent
- If the total bill of sale is $1.05, you pay $1.05 — nothing changes
- If the total bill of sale is $1.06, you pay $1.05 — you save one extra cent
- If the total bill of sale is $1.07, you pay $1.05 — you save two extra cents
- If the total bill of sale is $1.08, you pay $1.10 — you pay two extra cents
- If the total bill of sale is $1.09, you pay $1.10 — you pay one extra cent
- If the total bill of sale is $1.10, you pay $1.10 — nothing changes
Of course, the above list assumes that you use cash to pay for goods and services. If you use credit cards, debit cards, checks and other means of paying without cash, the total bill of sale will remain exactly the same, as the absence of the penny will not cause the total bill of sale to be rounded up or rounded down.
Businesses have reportedly been asked to return pennies to financial institutions so that the coins can be melted down and their metal content recycled.
The following video is a news report by the CBCNews division of the Canadian Broadcasting Corporation:
Some FlyerTalk members believe that not only should the penny have been abolished a long time ago, but they also believe that the nickel should face a similar fate of extinction. Coin-cidentally, the Canadian penny contains approximately 1.5 percent nickel, so I suppose that is a start.
If you believe that the Canadian penny will be worth more due to its production being ceased, I would think again: the 1943 “white” penny of the United States was made of steel and coated in zinc because there was a shortage of copper, which was needed for use during World War II. Ironically — or, should I say, steel-ically — the pennies from 1943 which were made from copper are substantially more valuable because there are significantly fewer of them than the “white” penny, which can be worth as little as 50 cents.
Do the math: 1943 was 70 years ago — and there are fewer “white” pennies in existence than there are Canadian pennies. I am not a professional numismatist, but assuming that the Canadian penny increases in value at the same rate as the 1943 “white” penny in the United States, that is an increase in value of not even one penny per year for each penny. There is no basis for my comparison, to be sure; all I am saying is do not hold your breath hoping that the Canadian penny will appreciate in value significantly enough in your lifetime to be worth holding on to it.
Regardless, Canada is apparently far from the first country to abolish the penny. Sweden, New Zealand, Finland, Australia, the Netherlands and Norway supposedly eliminated pennies with no public outcry and no noticeable effect on inflation.
Interestingly, rounding already occurs in the United States on a voluntary basis. I have seen both customers letting merchants keep the change if it is a couple of cents; while retailers occasionally will give the customer a one-penny or two-penny break while saying “Don’t worry about it.” I am not certain, however, that the United States is ready to officially eliminate the penny just yet, although I have heard discussion about it for years now…
…but if the penny is indeed eliminated, does that mean that a hotel room cannot be sold for a night for one penny anymore? What about a frequent flier loyalty program mile being worth one penny — would that cease to exist as well? When FlyerTalk members decided to undertake a “mileage run”, will the calculation of three cents per mile be rounded up to five cents per mile?
Of course, I ask those questions in jest — but I will coin a phrase in the form of a question while I can still ask it: how about a penny for your thoughts?