OTTAWA (Reuters) - A Canadian legislator formally proposed on Wednesday that the country’s 1 cent coin, or penny, be scrapped on the grounds that it was “an expensive nuisance” and cost more to produce than it was worth.
Pat Martin of the opposition New Democrats said it cost Canada C$130 million ($127 million) to produce 1.2 billion pennies last year, largely because so few of the small coins are actually circulated.
“Making cents, in fact, makes no sense at all ... most Canadians believe the penny is an expensive nuisance,” he told a news conference, saying the copper coins tended to end up “underneath people’s beds, in cookie jars and old biscuit tins” before being donated to charities.
Martin dismissed fears that the move would be inflationary, saying prices for those paying with credit cards would stay the same. The prices for those paying cash would be rounded either up or down to the nearest five cents.
He said a string of other countries, such as Australia and New Zealand, had recently scrapped their smallest denomination coins without any problems, and said these countries’ rounding systems ensured the move was revenue neutral.
Doug Porter, deputy chief economist at BMO Capital Markets, said scrapping the penny was unlikely to have a major effect on the inflation rate.
“When you think about the majority of items that are currently priced at, say, C$7.99, the percentage increase would be 0.1 percent in a case like that,” he told Reuters.
Martin said there was broad interest among retailers and consumer groups alike for scrapping the coin, which was introduced in 1908.
“We believe that at the same time we have a birthday party for the penny, we should have a funeral,” he said.
Despite Martin’s enthusiasm, his chances of success seem slim. His bid to scrap the penny is being introduced into Parliament as a private legislator’s bill, the vast majority of which fail.
A spokesman for Finance Minister Jim Flaherty said that while the usefulness of the penny was always part of regular reviews of Canada’s coinage system, no changes were planned for now.
Martin did identify one problem that would be posed by the penny’s abolition, saying: “I don’t know what we’ll do about all the cliches. ‘A penny for your thoughts’ will have to be adjusted, I suppose, to keep with the times.”
Reporting by David Ljunggren; editing by Rob Wilson