Canadians can no longer use their pennies; as of today, the Canadian government has removed the penny as a usable form of currency unless a business specifically chooses to accept the coin. If an item costs $1.02, it will be rounded down to an even $1 for cash customers. Consumers paying with credit card or check would still pay the $1.02. While the change may be difficult for both consumers and retailers at first, I’m sure it will be a welcome change in the long run. The Canadian mint expects that this move will save taxpayers $11 million a year.
If I were Canadian, I’d welcome the change and while I’d love to see the United States follow suit and stop minting the penny, I’m not holding my breath. According to the Americans for Common Cents, a penny advocacy group (yes, there is such a thing), two-thirds of American adults want to keep the penny in circulation.
Nearly two-thirds of Americans also oppose instituting an official price rounding policy. More than three-fourths of American adults surveyed, 77 percent, are concerned that businesses would raise prices on products and services if the United States implemented a rounding system on cash purchases. The price increase would affect everyone, not just consumers who choose to use cash.
According to CNNMoney, “The U.S. Mint spent 2 cents to produce and ship each of the 5.8 billion pennies sent to banks last year. But in addition to being a money loser for the Treasury, there are arguments that the penny has simply outlived its usefulness.”
Americans for Common Cents claims that eliminating the penny will not save the nation money. Instead, eliminating the penny will cost the federal government more money than it saves from not minting the coin.
“By contrast, eliminating the penny would increase spending for many federal government programs, causing inflationary pressures, and it wouldn't save money. The U.S. Mint has said that without the penny, fixed costs associated with penny production would have to be absorbed by the remaining denominations of circulating coins.”
In addition to possibly raising expenses at the federal level, eliminating the penny could also have a negative impact on charitable organizations; charities that are still trying to recover from the Great Recession. Think about all of those little coin collection bins you see at convenience stores, gas stations and drug stores — they are often filled with pennies, and if the U.S. removes the penny from circulation, these donations will also be eliminated.
What do you think? Should the United States follow Canada’s lead and eliminate the penny or keep the coin in circulation?
Related post on MNN: Why Canada killed the penny