The Canadian penny has officially ceased circulating in the nation to the north. That move has rekindled a debate domestically that has been going on for decades.
So long Canadian penny
Do you hate it when your get change back at the checkout counter and later find out that you had been handed some Canadian pennies? Well, that annoyance will soon be a thing of the past. The copper alloy coins were officially taken out of distribution by the Royal Canadian Mint on Tuesday, Feb. 5.
The last penny itself was actually minted last May. The Canadian penny had been in circulation for more than a century and a half. From now on, all cash transactions will be rounded up or down to the nearest five cents.
Doesn’t make enough cents
The reason for that is because the rising cost of metals has made pennies more expensive to produce than their one cent face value.
A press release Tuesday states, “The decision to phase out the penny was due to its excessive and rising cost of production relative to face value, the increased accumulation of pennies by Canadians in their households, environmental considerations, and the significant handling costs the penny imposes on retailers, financial institutions and the economy in general.”
A Canadian coin costs 1.6 cents to make. By eliminating the coin, Canada can save $11 million per year, according to The Royal Canadian Mint.
Canada is only the latest country to make the move. Australia, Finland, New Zealand, Norway, Netherlands and Sweden have also phased out their smallest-denomination coins.
U.S. debaters throw in their two cents
Meanwhile, south of the border, the news has re-sparked the debate over whether or not to phase out the U.S. penny. Domestically, we are losing much more by keeping the penny than are our neighbors to the north. A U.S. penny now costs a whopping 2.41 cents to make. According to RetireThePenny.org, U.S. taxpayers lost about $70 million in 2011 to the Lincoln-faced coin.
Those who support keeping the U.S. penny argue that prices will go up, with everything rounded to the nearest five cents. However, others counter, the rounding would be either up or down, depending on the nearest multiple of five, effectively canceling out any price fluctuation.
Penny advocates also say that pennies have a vital use for charity penny drives, and that perhaps fewer people would be willing to contribute to a “nickle drive.” But then, since nickels have 500 percent of the value of pennies, they don’t need to.
However, a recent poll found that two-thirds of Americans favor keeping the penny.
Legislative attempts fizzle
Congress has considered eliminating the U.S. penny in 1990, 2001 and 2006. None of the bills gained enough approval to pass.
Last April, the House Financial Services Subcommittee on Domestic Monetary Policy and Technology looked into the impact of discontinuing the circulation of the penny.