Last week Canada minted its last penny. Experts say that the move will save the nation $11 million a year. Some say the same thing should happen in the United States.
The last Canadian penny
The cost of copper is up and with it the cost of minting a penny. At this time, it costs more than two cents to mint a single penny in the U.S. Earlier this year, the Obama administration suggested finding cheaper materials to make pennies and nickels.
But our neighbors to the north have gone one better. Canada has eliminated the 1 cent coin, which has been in circulation for 104 years. The last Canadian penny was minted Friday.
Why it is a benefit
It cost the Canadian government about 1.6 cents to produce its copper-coated, maple leaf-stamped penny. In addition to that calculable loss, many say the penny has become virtually worthless. They are not accepted in vending machines or parking meters. They have so little value that most consumers considered them to be more of a bother than they are worth.
Savings greater in the US
The United States mints more pennies than Canada and at a greater loss. Each U.S. penny costs about 2.41 cents to make. According to Rick Smith of the Motley Fool, the U.S. cold save a staggering $70 million annually by losing the copper Lincoln-headed disks.
Giving to charity
While the coins will still have value, the Canadian government is encouraging its citizens to get them out of circulation by donating them to charity.
Canadian Finance Minister Jim Flaherty said:
“We hope all Canadians will consider putting their last pennies to good use by donating them to charity. I consider it fitting they could have a lasting impact on causes that Canadians believe in.”
Rounding to fives
Some have expressed concern that eliminating the penny will cause merchants to round up to the nearest nickel, costing consumers more in the long run. However, according to the Wisconsin State Journal, that has been debunked by researchers in Canada and the U.S. Some prices would round down to the nearest nickle and others would round up, making it a virtual wash.
Previous legislative attempts
Twice before, legislators have tried to eliminate the penny in the U.S. The Legal Tender Modernization Act failed in 2001. In 2006, the Currency Overhaul for an Industrious Nation (COIN) Act failed. That law would have required rounding to the nearest 5 cents to phase out the penny.
Eliminating dollar bills, too?
Other experts want to go one step further. An article in Wisconsin’s Lacrosse Tribune suggests eliminating the penny and replacing the $1 bill with a coin that would be different enough from the Susan B. Anthony dollar coin that it could not be mistaken for a quarter.
According to the article, Canada eschewed its paper dollar bill decades ago. It went on to say that a feasibility study by the U.S. government found that $5.6 billion could be saved over three decades by doing the same.
The reason for those savings is that coins stay in circulation for decades, whereas paper bills last, on an average, only a few years.
‘Minting Canada’s last penny’