Canada Kills the Penny and Saves Millions: Why We Should Too

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Canada penniesCommodity metal costs are soaring. So much so that it now costs more for the U.S. Mint to produce a penny (or a nickel) than the coins themselves are worth.

Vexed by the problem, the Obama Administration has put forward a plan to debase the metal content of the coins, to try and bring the cost down.

Up in Canada, however, they took a different approach: They stopped making pennies.

That's right, folks. On May 4, the Canadian Mint minted its last penny.

Technically, the 1-cent denomination still exists. If you have Canadian pennies lying around, merchants will still accept them. They're still legal tender. Store owners, however, are being encouraged to start rounding prices to the nearest 5-cent denomination.

Consumers, ever wary, wonder whether this means all prices will get rounded up, hitting their pocketbooks. Whether this is how things play out, though, remains to be seen.

What is certain, according to the Canadian government, is that halting the production of Canadian pennies will save these same consumers a good jingle's-worth of pocket change come tax time. The government estimates that putting a hit out on the penny will save it about $11 million (Canadian) in production costs.

Murder for Hire, or a Murder to Admire?

Adding insult to injury, Canada didn't come up with this penny-killing idea on its own. Fact is, the U.S. Congress has already floated the plan ... twice.

In 2001, a bill titled the Legal Tender Modernization Act proposed eliminating the penny. When that failed, the 2006 Currency Overhaul for an Industrious Nation (COIN) Act would have required rounding to the nearest nickel -- again, a la Canada.

So that $11 million that could easily have been ours, too. And actually, we'd save even more, for a pair of reasons.

First, we mint far more pennies than our less-populous neighbor to the north. Last year, the U.S. Mint produced nearly 5 billion pennies. Second, ours cost more than theirs. According to government statistics, Canada says it's been minting the Canadian coins at a price of about 1.6 cents apiece, while each U.S. penny costs 2.41 cents to make. For the U.S. taxpayers, that adds up to almost $70 million we could have saved by dumping the 1-cent piece.

Moral of the story: If killing the penny makes sense for Canada, then it should make a lot more cents for the United States.



Motley Fool contributor Rich Smith holds a special place in his heart for bad puns. He owns some of the currencies mentioned above.


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33 Comments

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Gabrielle Grun

Rally for a 2 cent or 3 cent coin:
http://www.facebook.com/josephprince#!/RallyForThe2CentCoin

November 10 2012 at 12:06 AM Report abuse rate up rate down Reply
Nick

I expect that it costs more than a dollar to produce a new one dollar bill as well. A single penny is worth a penny every time it is used to buy something. It will circulate for many years and over its life represents hundreds of dollars in trade. Maybe even thousands. The cost to manufacture has no direct relation to the actual useful value of the coin. I don't know if our elected officials become stupid after being elected or merely start out that way.

May 09 2012 at 2:06 PM Report abuse rate up rate down Reply
hhengineeringinc

they can have my pennies at 2 cents a coin and keep the savings

May 09 2012 at 1:36 PM Report abuse rate up rate down Reply
.kowalski440mag

I can think of a thousand more wasteful programs our gov. can cut that would save way more money than this idea. Besides a penny is worth something. If it costs the Office of Engraving and Printing $10M to stamp $8M in pennies the loss is only $2M......there is $8M worth of hard currency about. I'd bet there are at least 1,000 spending programs at the fed. level that waste $Millions$ or $Billions$ with no corresponding tangible assets.

May 09 2012 at 8:47 AM Report abuse +1 rate up rate down Reply
circustwo

70 Million ? ! The government wastes a lot more than that before lunch every day.

May 09 2012 at 8:34 AM Report abuse +2 rate up rate down Reply
Robert & Lisa

Why not just be fiscally responsible? Then we wouldn't need to scrap the penny because it would be worth something.

May 09 2012 at 5:23 AM Report abuse +1 rate up rate down Reply
ghalstead1

Yeah, kill the penny. Then, what are kids gonna do when they try raising money for school and/or church charities.

Pennies are important to children. Is saving $70 million a year the answer to our country's economic troubles? Where did this idea come from...1600 Pennsylvania Ave?

May 08 2012 at 10:12 PM Report abuse +1 rate up rate down Reply
dollibug

http://ireport.cnn.com/docs/DOC-736024 murder to admire....I think NOT.....the link provided is a prime example of CORRUPTION AND COVER IN USA.....

May 08 2012 at 9:51 PM Report abuse -1 rate up rate down Reply
gazderpha

If they round the cost up to the nearest nickel, they should round it down too. If something costs $1.02 make it $1.00. If something is .99, make it $1.00

May 08 2012 at 9:15 PM Report abuse rate up rate down Reply
1 reply to gazderpha's comment
Robert & Lisa

agreed

May 09 2012 at 5:24 AM Report abuse rate up rate down Reply
democracks0

We should keep the pennies and get rid of the Obamites.

May 08 2012 at 9:02 PM Report abuse +4 rate up rate down Reply