Chapter 14

Penny should be scrapped: Senate Panel

Canadians are hoarding the coins, not spending them

http://www.cbc.ca/money/story/2010/12/14/con-penny-debate.html

Summary:

According to the recommendations of the Senate finance committee, government should scrap the penny.  They are suggesting that we develop guidelines for rounding off the purchase prices for cash-only transactions.  It costs about 1.5 cents to make one penny - that's half a penny more than it's worth.  In comparison to 100 years ago, items that once cost a penny, now cost 20 cents.  The one-cent piece has lost 95% of its purchasing power since 1908 when the copper piece was introduced in Canadian currency.  Also, as Canadians choose to hoard these coins instead of spending them, there are fewer circulating; this has caused the Royal Canadian Mint to increase their production of pennies.  As well, the senators have estimated that there are 600 pennies being hoarded per person across Canada.

Connections:

In relation to this chapter, the retailers would have to calculate different costs for the consumer, depending on their method of payment.  If by cash, they would have to abide by rounding guidelines that would be in effect if the penny was scrapped.  If they pay electronically, by debit/credit, (or by cheque) there would be a different cost to pay, this difference would be subtle.  As well, the transaction would occur normally.  When proving the cash for over-the-counter sales or cash register receipts, the cash transactions would have rounded values.  However, the article does not describe how tax would be calculated.  I think that after the tax has been included into the price, the total will be rounded off.  I would think that on a daily Cash Proof and Sales Summary in the cash sales section, the tax amounts will have their original value; the sales value will be the remainder of the overall total.  As well, after taking out the float, it will be easier to calculate how much cash short or over the business is.  It saves time from counting every single penny to see how many of them there are.  Some businesses today do not even bother counting the pennies seeing how inefficient the process is.

Reflection:

A penny earned, a penny saved.  If the penny goes, will phrases like this stay around?  Will we see pennies ending up in fountains?  What will happen to the lucky penny?  Even though pennies have sentimental value, I do not see any other reason as to why we should keep them.  These days, you cannot buy anything with a few pennies, as you could way back 100 years or so.  As well, when I buy something and I receive pennies, I just let them sit in my wallet.  When I get home and empty out my change, I do not bother to pay attention to the pennies.  If I happen to have some pennies in my wallet and there is a chance to spend them, I'm eager to get them out of my hands.  If it costs 1.5 cents to make to make a penny and millions of these copper coins were made, I would rather the government spend that money somewhere else.  Also these days, many people are moving away from cash and are purchasing goods electronically, via debit/credit cards.  With these, the cents value would not be rounded.  Already, New Zealand and Australia have scrapped their one-cent pieces and they get by fine without it.  I think we should follow suit.  If we do get rid of the penny, I still think that they should become a collector's item.