Thursday, December 20, 2012

Canada doesn't make cents any more

This spring, the Royal Canadian Mint pressed its last penny. The Canadian government stopped production of the cute little coins, because it was making a loss of 6/10th of a cent on each and every one. So, according to Jim Flaherty, the Minister of Finance, $11 million a year in production costs would be saved by doing away with the cents.

However, Canadian Press reports today that redeeming the six billion or so pennies presently in circulation will cost Canuck taxpayers about $7.3 million a year for the next six years. (That's about $7.4 million in "real money".)

Costs include $53 million expected to be paid out to redeem the face value of the coins, as well as another $27 million for the Mint's handling and administration costs. Recycling the zinc and copper from melted-down pennies will bring in about $42.5 million in revenue, leaving the government in the red by a tad over $38 million.

The good news is, when you add the $11 million in annual savings from not minting any more pennies, the government still saves almost $4 million per year over the expected six-year redemption period. Ah, the complexities of public finance.

But Walt has a suggestion for the Canadian government, or the US government, if they ever decide to follow the lead of the frugal frostbacks. [As if that will happen. The USA still has single dollar bills! Ed.] [Never mind. Do you want to hear this or not?! Walt]

OK, here's Walt's can't-miss cost recovery plan. Sell the old pennies to Zimbabwe! They use US dollars there -- each one worth almost, but not quite, a Canadian dollar -- but they have no coins because they can't afford to import any. So ship them the Canadian cents at, say, half their face value, plus S+H, plus HST, and they should fetch pretty close to C$50 million, which is $7.5 million more than the expected revenue from recycling.

Note to Jim Flaherty: You don't need to thank Walt publicly. Just send a cheque.

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