Mzor203
April 15th, 2008, 11:51 PM
This is an interesting article I read earlier today in MacLean's magazine. My first topic here too!
A penny spurned
FROM THE EDITORS | April 9, 2008 |
Last year the Royal Canadian Mint surveyed Canadians on their attitudes toward the penny. Among the questions: if you dropped a penny down the back of your sofa while watching TV, would you stick your hand in to get it back? Two-thirds of Canadians said no. They'd rather leave the penny to sit for eternity as sofa-bottom detritus along with old Cheezies, inkless pens, lost buttons, Happy Meal toy parts and prehistoric dust bunnies. And that, really, is all you need to know about the Great Canadian Penny Debate. If something's not worth the effort of getting back, it's probably not worth having in the first place.
This month, NDP MP Pat Martin introduced a bill to abolish the penny. The result has been the most positive coverage his party has earned in a long while on a money issue. According to Martin, it makes little financial success for the mint to churn out its 800 million pennies per year. Each cent costs approximately four cents to make, which means pennies are a losing proposition for taxpayers. Total losses run an estimated $24 million per year.
To this must be added numerous efficiency costs. In 2003, economists at Wilfrid Laurier University in Waterloo, Ont., calculated the price to society of having cashiers dole out change in pennies while everyone else stands around waiting. At just an extra second per transaction, it works out to $65 million in wasted time and effort annually. No surprise small retailers are enthusiastic backers of penny-removal. And we haven't even mentioned the repair costs for all the pockets ruined by excessive penny packing, or various other nuisances such as rolling and storing the coins. All of which raises the issue of who exactly is in favour of the penny.
In the U.S., where a similar debate rages, the sides are clearly drawn. Democrat front-runner Barack Obama recently said he would "seriously consider eliminating the penny" provided he could find another way to honour his hero Abraham Lincoln, whose profile graces the American penny. That sets him against the active pro-penny lobby group Americans for Common Cents, which is funded by the zinc industry (the main ingredient in pennies) and coin distributors.
In Canada, penny backers are harder to find. Charities, surprisingly, support its removal. Banks say they're no fans of the penny either. Armoured car companies seem ambivalent. Large retailers express concern about the costs of converting to a new system of change-making, but we heard the same thing when the GST was lowered. Some consumers say they're worried that abolishing the penny will become an excuse for stores to raise prices. But the experience of Australia, where one- and two-cent coins were abandoned in 1992, shows this not to be the case. Stores there round up or down for cash purchases based on an easy formula. If the final price ends in 1 or 2, round down; 3, 4, 6 and 7, round off to 5; 8 and 9 round up. Non-cash transactions still retain one-cent increments. Simple.
After a century of use, the penny is now less than worthless. It doesn't buy anything and costs us all plenty in time, effort and taxes. It's time for (less) change.
Note that this is the Canadian Maclean's.
A penny spurned
FROM THE EDITORS | April 9, 2008 |
Last year the Royal Canadian Mint surveyed Canadians on their attitudes toward the penny. Among the questions: if you dropped a penny down the back of your sofa while watching TV, would you stick your hand in to get it back? Two-thirds of Canadians said no. They'd rather leave the penny to sit for eternity as sofa-bottom detritus along with old Cheezies, inkless pens, lost buttons, Happy Meal toy parts and prehistoric dust bunnies. And that, really, is all you need to know about the Great Canadian Penny Debate. If something's not worth the effort of getting back, it's probably not worth having in the first place.
This month, NDP MP Pat Martin introduced a bill to abolish the penny. The result has been the most positive coverage his party has earned in a long while on a money issue. According to Martin, it makes little financial success for the mint to churn out its 800 million pennies per year. Each cent costs approximately four cents to make, which means pennies are a losing proposition for taxpayers. Total losses run an estimated $24 million per year.
To this must be added numerous efficiency costs. In 2003, economists at Wilfrid Laurier University in Waterloo, Ont., calculated the price to society of having cashiers dole out change in pennies while everyone else stands around waiting. At just an extra second per transaction, it works out to $65 million in wasted time and effort annually. No surprise small retailers are enthusiastic backers of penny-removal. And we haven't even mentioned the repair costs for all the pockets ruined by excessive penny packing, or various other nuisances such as rolling and storing the coins. All of which raises the issue of who exactly is in favour of the penny.
In the U.S., where a similar debate rages, the sides are clearly drawn. Democrat front-runner Barack Obama recently said he would "seriously consider eliminating the penny" provided he could find another way to honour his hero Abraham Lincoln, whose profile graces the American penny. That sets him against the active pro-penny lobby group Americans for Common Cents, which is funded by the zinc industry (the main ingredient in pennies) and coin distributors.
In Canada, penny backers are harder to find. Charities, surprisingly, support its removal. Banks say they're no fans of the penny either. Armoured car companies seem ambivalent. Large retailers express concern about the costs of converting to a new system of change-making, but we heard the same thing when the GST was lowered. Some consumers say they're worried that abolishing the penny will become an excuse for stores to raise prices. But the experience of Australia, where one- and two-cent coins were abandoned in 1992, shows this not to be the case. Stores there round up or down for cash purchases based on an easy formula. If the final price ends in 1 or 2, round down; 3, 4, 6 and 7, round off to 5; 8 and 9 round up. Non-cash transactions still retain one-cent increments. Simple.
After a century of use, the penny is now less than worthless. It doesn't buy anything and costs us all plenty in time, effort and taxes. It's time for (less) change.
Note that this is the Canadian Maclean's.