Canada ditches the penny

This line-item is basically a smokescreen for cutting all sorts of other important things (like the research tax credit, SR&#38;ED; various social programs; the budget for our national broadcaster, the CBC; and the salary of the Chief Electoral Officer):<p><a href="http://www.reddit.com/r/canada/comments/rjrfn/the_budget_5_billion_in_cuts_over_3_years_and/" rel="nofollow">http://www.reddit.com/r/canada/comments/rjrfn/the_budget_5_b...</a><p>Amusingly this particular cut was actually a private member proposal from the NDP (the left-most mainstream party).

A brilliant decision. Now if we could only get rid of our 1 euro cent here.<p>According to some inflation figures I quickly found on the internet, a (US dollar) penny had a hundred years ago 23 times as much buying power as a penny nowadays. That means the smallest denomination was then was worth almost as much as a quarter is now! People could get by without smaller coins then and they should be able to work perfectly fine now without worthless pennies.

Just as a point of interest, Australia removed the 1 and 2 cent coins from circulation back in 1992. Prices have been rounded to the nearest 5 cent value when paying with cash ever since. A comment on this thread said that it's madness, but it's all someone my age has grown up with.

Reminds me of an anecdote about a woman who balanced her checkbook by rounding all amounts to the nearest dollar. Her father eventually heard about this, freaked out, and re-tallied everything — and ended up within a dollar of her previously-computed balance.

"They cost more to produce than they are worth, nobody likes them, they have no commercial value."<p>My very first (very primitive) public facing webpage was dedicated to abolishing the Canadian penny. Good riddance!

"And some old adages will likely fade away, too."<p>Australia hasn't had pennies since the sixties and we still use phrases like "in for a penny, in for a pound."

Does that mean pricing psychology would work differently? 19.99 would be out of fashion?

I suspect that POS software vendors will make billions of pennies selling upgrades.

I wonder how this will affect sales taxation, as the tax rate isn't a multiple of 5 in all provinces, and hence the amount of tax collected on a purchase will have to be either be rounded down or up.

Now is a good time to buy up all the pennies for cheap. Melt them down the day they're abolished and sell it all as scrap metal (or don't sell if you think it'll hold value like gold does).

Great in a way that it costs more money to produce a penny than what it's worth.

This is simply patching over the underlying problem - dilution in the money supply. There is no reason why countries like the US and Canada who have only become a lot wealthier in the last 200 years should have such inflation. Stop printing money, and the penny will remain valuable!

i wonder if Canada has that bit, where the prices you see in the store are the final prices(i..e with tax already calculated in)

The glory of central banking.<p><a href="http://coinflation.com/" rel="nofollow">http://coinflation.com/</a>

Ridiculously simple solution: Drop the hundredths place entirely. Kill pennies, nickels, quarters, bring back $.5 pieces.<p>A tenth of a dollar is enough precision for any realistic transaction in the United States.

Is the ditching of the penny an alarming event like the addition of a zero on the largest denomination of currency? Why do I work hard to exchange my labor for money that is being inflated on purpose?

The beginning of the end.

<i>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.</i><p>Something just feels wrong about rounding. The customer would always get screwed. They should solve this problem by using the federal sales tax to round up/down. $1.25 + 5% = 5¢ of tax instead of 6.25¢.<p>That said, it would make sense for merchants to round down for cash purchases. It would be a tiny incentive to use cash rather than credit cards (which cost the merchant 2-4%)