The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.
Eliminating coin offers large potential savings.
At no time soon will the U.S. be following Canada’s example of scrapping the penny. That process started Monday, as the Royal Canadian Mint ceased distribution of the nuisance coin to banks and other financial institutions.
The benefits for Americans in following suit are self-evident.
In 2011, the U.S. Mint was spending 2.4 cents to make a penny, which slipped back to the recent norm of 2 cents last year. The loss to the U.S. Mint — to Americans, that is — comes to $58 million a year. For Canada, those figures were 1.6 cents and $11 million.
A century ago, the penny had close to 25 times the buying power it does today. A mere 19 per cent of Canadians still pay cash in retail and hospitality transactions, estimates show. And that 19 per cent, Star reporter Jessica McDiarmid noted Friday, imposes an estimated cost on business of about $150 million a year in handling pennies alone.
About two-thirds of store purchases are non-cash transactions — debit, credit and mobile payments. Then there’s online shopping, poised for exponential growth, where payments are exclusively non-cash. Taking note of Monday’s penny phase-out in the Great White North, Time magazine describes it as a “Canadian experiment.” Oy.
Canadian acceptance of the penny’s demise has been overwhelmingly positive. The declining utility of the one-cent piece makes the phase-out long overdue. Indeed, it trails Australia’s “experiment” in scrapping its penny by 23 years.
“At some point, you need to look at this like a business,” Oklahoma City businesswoman Terry Neese told the Associated Press last month. Neese turned down a 2005 offer to head the U.S. Mint. “When it costs twice as much to produce an item than what you are selling it for, you can’t sell it for very long.”
Indeed, U.S. Congressional auditors recently went further, counselling the elimination of dollar bills. The savings for Americans in replacing the fragile paper bill with a $1 coin would be, they estimate, about $4.4 billion over three decades.
But, as Neese points out, America’s experiments with dollar coins “have never been effective in the system because they look too much like the quarter.”
Well, double oy. Why not, um, make a U.S. dollar coin that looks different than a quarter? A coin with a larger circumference than the quarter and that has a unique design. Like the loonie, say, whose embrace by Canadians was so enthusiastic that the toonie soon followed?
This is where common sense goes out the window and the lobbyists step in, as you likely guessed.
For the rest of this article, please go to the Toronto Star website: http://www.thestar.com/business/economy/2013/02/04/as_canada_phases_out_penny_us_sticks_to_its_cents_olive.html