Canada Eliminates Penny Costing Penny-and-a-Half to MakeMar-30-2012
Canada will withdraw the penny from circulation this year, saving taxpayers about C$11 million ($11 million) annually and forcing retailers to round prices to the nearest nickel, the government announced in its budget today.
The Royal Canadian Mint, which has produced 35 billion pennies since it began production in 1908, will cease distribution this fall due to the coin's low purchasing power. Production and handling cost for the one-cent coin are a C$150- million drag on the economy, according to a 2006 study by Desjardins, a Levis, Quebec-based financial institution.
"Pennies take up too much space on our dressers at home," Finance MinisterJim Flaherty said in the text of his budget speech in Ottawa. "They take up far too much time for small businesses trying to grow and create jobs."
Business groups welcomed the move, which follows other countries such as Australia, Brazil and Sweden, and economists said it would have little impact on inflation.
"If there's a rounding up, you'd see a rounding down somewhere else," said Craig Wright, chief economist at Royal Bank of Canada.
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Posted by Ken at 1:43 AM
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