Penny gets stay of execution
The
penny’s days are still numbered, but the controversial Canadian coin is getting a last-minute reprieve before it’s finally killed off as a circulated currency.
The penny, its death sentence originally pronounced in the last federal budget, will no longer be circulated in Canada as of Feb. 4, 2013, Finance Minister Jim Flaherty said Monday.
It has the holiday season — and the winter buying season’s importance to Canadian retailers — to thank for the temporary stay of execution.
The Royal Canadian Mint, which stopped producing the coins in May, was originally expected to start taking the penny out of circulation by this fall. But retailers and other small businesses complained that the transition to a penny-free marketplace would be too much of a burden right before the busy holiday season.
“Setting a clear transition date will allow consumers, businesses, charities and financial institutions to plan accordingly in the lead-up to February,” Flaherty said in a news release.
“We want to thank all Canadians for sharing their views with us, especially as it relates to this transition.”
After Feb. 4, cash transactions will have to be rounded to the nearest five-cent increment, but electronic transactions will still be calculated down to the individual cent.
Flaherty announced in his March budget that the penny would be phased out, saving taxpayers an estimated $11 million annually. It costs roughly 1.6 cents to make each penny.
Flaherty was on hand at the stamping of the last one-cent coin in May — a media event that was estimated to cost $56,000.
Evidence at Senate hearings on the issue last year suggested there should be little impact on inflation, as the penny’s elimination would only affect cash transactions and only be seen in the total bill paid by a customer, rather than on each individual item.
The finance department said Monday that the new transition date won’t require production of more pennies, since there are more than enough pennies in circulation to cover the extra few months.
Ottawa is encouraging charities to take advantage of the extra time that pennies remain in circulation by holding dedicated “penny drive” campaigns beyond their usual fall fundraising ventures.