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Canadian Penny Killed In Canada Budget 2012

Posted: 03/29/2012 4:50 pm Updated: 03/29/2012 7:29 pm

Canada Penny Budget 2012
Canada's penny will be phased out in the budget.

OTTAWA -- There may still be pennies from heaven, but they won't be coming from the mint much longer.

The humble one-cent piece is set to disappear from Canadian pockets, a victim of inflation.

Thursday's federal budget said the Royal Canadian Mint will strike the last of the little coins this fall.

The budget says the cost of minting a penny has risen to 1.6 cents or $11 million a year. Its purchasing power has fallen to a 20th of its original value.

"Some Canadians consider the penny more of a nuisance than a useful coin," the budget documents said.

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And so the coin will go the way of the old 25-cent shinplaster.

"The penny is a currency without any currency in Canada,'' Finance Minister Jim Flaherty said at a news conference.

GALLERY: FEDERAL BUDGET HIGHLIGHTS

It's nothing but a nuisance for business, he added.

Pennies will still be legal tender, but as they slowly vanish from circulation, prices will have to be rounded up or down.

If the customer has the pennies, they can use them. Payments with debit or credit cards or cheques can also be to the penny. But if the customer is paying cash and doesn't have the pennies, the total will go up or down to the nearest nickel. For example, $1.02 will become $1 and $1.03 will be $1.05.

The budget said experience in other countries that have dropped low-denomination coins suggests that rounding will be fair and there will be no impact on inflation.

As for those jars, boxes and bags of pennies sitting in countless drawers across the country, the government suggests people donate them to charities.

The penny has been under fire for years. New Democrat MP Pat Martin has introduced private member's bills over the years to kill it.

The disappearing penny will likely have little economic impact, but it may require some cultural adjustments.

Penny candy? A relic of the past. The penny arcade? Already gone.

And some old adages will likely fade away, too.

What are people going to pinch?

Will thoughts now cost a nickel?

See a penny? Leave it.

Penny-wise? Just foolish.

Take care of the nickels and the dollars will take care of themselves?

A penny saved is ... not much.

GALLERY: FEDERAL BUDGET HIGHLIGHTS


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OTTAWA -- There may still be pennies from heaven, but they won't be coming from the mint much longer. The humble one-cent piece is set to disappear from Canadian pockets, a victim of inflation. ...
OTTAWA -- There may still be pennies from heaven, but they won't be coming from the mint much longer. The humble one-cent piece is set to disappear from Canadian pockets, a victim of inflation. ...
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georgee2
My Canada Includes Everyone
111 Fans
07:41 AM on 04/07/2012
Well I am going to go against the grain here and say I like the penny. It only takes a hundred of them to make a dollar. We will pay more for everything as all prices will be set to be rounded up to the nearest nickle, dime, quarter or dollar. We will also pay more sales tax because of this change. Which brings me to another point. Why are our VAT taxes not included in the price of everything? When I travel to other countries the price on the sales tag is the price I pay at the cashier. It's much better
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HUFFPOST SUPER USER
Eileen Warren
43 Fans
 
02:04 AM on 04/03/2012
If they did some job cuts at the mint or increased the cost of making coins for other countries -the most continuous one being Barbados-the penny would be cheaper to make.Scrap the cost of telling us about the war of 1812-Thank the Lord the Conservatives do not know about the war of 1814!!!
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pinkibus
1826 Fans
07:58 PM on 04/02/2012
Prices will go up.
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Canadasnumber1
20 Fans
 
07:07 PM on 03/30/2012
Many people found pennies a nuisance and were glad to donate them to charities and causes. A charity in my locale collects pennies for a specific area of their charity work. Remains to be seen whether the loss of the penny from circulation will have any impact on fundraising. Hopefully, people won't be tight-fisted with their other change.
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Darrin Peverell
3 Fans
06:28 PM on 03/30/2012
This may mean nothing at all, but the timing of this is a bit odd, look at a calander.
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MFS001
1032 Fans
04:09 PM on 03/30/2012
The solution to inflation is not to progressively eliminate denominations - a rather sad admission that your wealth has permanently evaporated -- but to address the issue of inflation to begin with, which starts with the nature of our currency being a derivative of debt.
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mlauenstein
6 Fans
02:22 AM on 03/31/2012
Inflation doesn't need a solution. It's a requirement for our capitalist system to work.
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MFS001
1032 Fans
03:55 PM on 03/31/2012
Not really. It's only the "solution" we have decided to accept. Capitalism has existed throughout history even in times without a fiat currency.
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Jesusismyname
2 Fans
12:51 PM on 03/30/2012
if im at the store and someone doesnt give me my few pennys of change i feel kinda ripped off :/ i wonder how much this is actually going to cost me in the long run. a penny a day is a few dollars a year not much, but still
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old guys rule
5 Fans
04:42 PM on 03/30/2012
I, like hundreds of posters before me can tell you. If you are the unluckiest person in Canada it could cost 1 or 2 dollars a year. In 1989 I stopped giving out useless pennies. I rounded all totals. I retired in 2007. Nobody ever noticed. It has nothing to do with item cost. The total of sales plus tax is rounded. by 1 or 2 cents up or down You lose a penny exactly as often as you gain a penny but it only affects cash sales, not plastic. It is revgenue neutral. You are worrying about something that will never affect you.
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cheapcrazyme
0 Fans
04:45 PM on 03/31/2012
A lot of people think they are off the hook because they pay with plastic. They may be so wrong. The paper announced on Saturday that even people with plastic will have to pay down to the nearest cent, most likely because cash registers won’t be capable of calculating a total for those paying cash and those paying with plastic, Where will they go? A company like Walmart stands to profit close to $500,000 per month off our lost pennies with their daily 1 milllion+ customers. They’ll need a bigger piggybank pretty soon.
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mlauenstein
6 Fans
02:25 AM on 03/31/2012
Why are you using money?
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monstersfromtheid
micro-bio is empty - and staying that way
221 Fans
12:47 PM on 03/30/2012
Why do I have this nagging suspicion that retailers are rapidly working out the price-points that insure rounding up will be maximized?

Expect to see a lot of items that are not taxed to be priced at $--.98
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old guys rule
5 Fans
04:47 PM on 03/30/2012
Not worried. It would be impossible. No retailer could anticipate how often do you will check out with one item that costs 98 cents after tax or even the total of all your items together after tax then adjust every item in the store to beat you out of a maximum 2 cents on your total bill if you pay cash.
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Shem Shlomo
0 Fans
02:31 AM on 08/30/2012
I'm sure they'll hire mathematicians to work out the optimal pricing for the most common combinations... kind of an interesting problem.
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fisch123
Stuck in pending.
1208 Fans
06:57 PM on 03/30/2012
Assuming no tax just buy 4 at a time so it come to 3.92 and you save the 2 cents. If there is an advantage it's to the consumer all they have to do is take the time and figure it out.
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sweetblondie
78 Fans
12:33 PM on 03/30/2012
Does this mean my 2 cent opinion has to be rounded down?

I know, I know....it's bad...but it's all I could come up with, okay!?
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HUFFPOST SUPER USER
monstersfromtheid
micro-bio is empty - and staying that way
221 Fans
12:37 PM on 03/30/2012
sorry. your 2c isn't worth a dime.
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TexMarine
1 Fans
12:18 PM on 03/30/2012
Doesn't this disenfranchise poor people? ...and wishing wells...and penny loafers....would someone please think of the PIGGIE BANKS?!
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dakotamar
1 Fans
12:02 PM on 03/30/2012
it's not the penny we should be getting rid of, yes it may take 2.5cents to make a penny but it will last 30-40 years, just stop making new ones, every year. you don't need to replace it just because it is looking worn out or getting old. I see lots of pennys that are from the 60's and even the odd one from the 50's that hasn't been taken out of circulation. The real menace is paper money. How much does it cost to make a $5 bill that doesn't last very long at all? Make the $5 bill into a coin instead and save money that way.
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fisch123
Stuck in pending.
1208 Fans
06:59 PM on 03/30/2012
The reason they keep making more isn't they are getting worn out, some get lost, people keep them in a jar taking them out of circulation, and more and more people just throw them away. To keep enough in circulation for retailers they have to keep making more.
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Liz Wilson 2
“a small group can change the world
347 Fans
11:39 AM on 03/30/2012
If I was still working as a business advisor, I would be telling my clients to take advantage of the extra 2 cents when ever possible - call it profit gift from the conservative government.
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fisch123
Stuck in pending.
1208 Fans
07:01 PM on 03/30/2012
If you were my business advisor i'd fire you for that advice. The costs of trying to find an advantage are going to far outweigh the extra 2 cents.
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Liz Wilson 2
“a small group can change the world
347 Fans
09:24 PM on 03/30/2012
hopefully you won't get two responses - but I started one and it was lost somewhere in the ethernet....

It seems to me that you are someone who operates from an ethical perspective and think I am suggesting that you gouge your customers by asking for an additional 2 cents - because I am saying to do exactly that but the motivations are not as greedy as it sounded.
My comments are direct to those industries that make or sell things as opposed to people who sell services.

Your customers are either going to pay zero cents due to round down or five cents due to rounding up. If your product should sell for 1.02 your choice is to lose 2 cents on every sale or to up your price so that it sells for 1.05. Its just economics right? Unless the product has some pretty nice profit margin in place the 2 cent loss adds up throught the year.

If you are selling a component and you need to make a decision to drop your price by 2 cents or up it by 3 cents you are likely to price yourself out of the market and your customers will look to American suppliers who still use pennies because their product just got cheaper.

Losing the penny actually makes it harder on manufacturers because their canadian sourced inputs and finished product will in all likelihood go up in price and that will make it harder to compete with imports.
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HUFFPOST SUPER USER
Cael
110 Fans
 
11:20 AM on 03/30/2012
Peoples thoughts have just been increased to 5 cents because of this budget.
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Liz Wilson 2
“a small group can change the world
347 Fans
11:40 AM on 03/30/2012
except that this current conservative government doesn't listen to us little people anyway
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dakotamar
1 Fans
11:55 AM on 03/30/2012
does anybody?
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fisch123
Stuck in pending.
1208 Fans
07:01 PM on 03/30/2012
It rounds down, now we have no thoughts.
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sisNorth
34 Fans
11:16 AM on 03/30/2012
I wonder how much money will be made rounding everything UP ... you can be sure it won't be down.
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fisch123
Stuck in pending.
1208 Fans
07:02 PM on 03/30/2012
Prices wont change and 1 and 2 cents get rounded down, 3 and 4 up, so it evens out.
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HarleyOpenRoad
2177 Fans
11:09 AM on 03/30/2012
This decision was long overdue.
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