The Royal Canadian Mint has finally determined that the cost of making and distributing pennies to financial institutions exceeds the coin’s own monetary value.
Last week Canada took its last step towards the ultimate death of one of the most ‘shunned’ of coins. This means that Canadians will now face increased costs of goods and services, but the government views it as a way to pull in more revenue via sales tax.
Even though it has been a little over nine months since the mint stamped the very last penny, they have still been circulating. Finally, retailers started rounding cash transactions to the nearest nickel. For example, a transaction totaling $1.02 would round down to $1, but a purchase of $1.03 would round up to $1.05, while $1.07 would round down to $1.05 and a purchase of $1.08 would round up to $1.10.
Transactions paid with checks, credit cards, or debit cards will continue to be settled to the cent. The Goods and Services Tax and Harmonized Sales Tax will be calculated on the pre-tax price, not the rounded price. Canadians who hoard their pennies will still, however, be able to use pennies indefinitely to pay for purchases.
Businesses can continue to accept pennies, which will retain their value indefinitely. (And with about six billion pennies in circulation, they will not disappear anytime soon. The Royal Mint will also begin melting and recycling all the pennies received by the banks.
“The decision to phase out the penny was due to its excessive and rising cost of production relative to face value, the increased accumulation of pennies by Canadians in their households, environmental considerations, and the significant handling costs the penny imposes on retailers, financial institutions and the economy in general,” the Canadian Mint wrote in a press release.
Announced for release on Feb. 5, rolls of the last million pennies produced for distribution at the Royal Canadian Mint’s Winnipeg facility in the spring of 2012 reached a sell-out status by Feb. 8.
These pennies feature the famous maple leaves design by G.E. Kruger-Gray. Inscriptions surrounding the maple leaves include ’2012′, ‘CANADA,’ ’1 CENT’ and ‘KG’ for the designer’s initials. Composed of copper-plated steel, each has a weight of 2.25 grams, a diameter of 19.05 mm and a plain edge.
