VANCOUVER (Reuters) - Canada’s one-cent coin has outlived its usefulness, usually ends up forgotten and should be pulled from circulation to save money, a Senate committee recommended on Tuesday.
“The fact is that the penny is not of much use any more,” said Richard Neufeld, vice chairman of the Senate Finance Committee, noting the penny has lost 95 percent of its purchasing power since the coin was introduced in 1908.
There are about 22 billion one-cent coins in circulation, or about 600 for every Canadian. But people often leave them at home rather than spending them.
“Most of us know the penny as little more than a nuisance that slows down the line at grocery store, and ends up under our couches or in drawers,” Neufeld told reporters in Ottawa.
That means the government constantly has to mint new coins, and it costs an estimated 1.5 cents to produce each penny.
A study estimated in 2005 that scrapping the penny would save more than C$131 million dollars in the cost of producing, storing, sorting and transporting the coins.
The committee recommended stopping production as soon as practical, and said those pennies still circulating should be withdrawn from circulation over the next two years.
One-cent fractions would remain in force for electronic transactions, but the government should work with the retail and service industry to develop guidelines on rounding prices to the nearest five cents, the committee recommended.
Committee chairman Joseph Day said many people still have an “emotional attachment” to the coins, so it is unclear how many people would actually bother to return them.
It would be the first time Canada has eliminated a coin, although many other countries have already taken low denomination coins out of circulation.
The lawmakers said the Bank of Canada is not concerned that eliminating the penny would create inflationary pressures.
Reporting by Allan Dowd; editing by Janet Guttsman