Canadian Federal Government budget does away with the penny. How does that work exactly?

[applegrove]

I guess you round up or down to the nickle.

[doc03]

1. I don't understand why the hell we don't do away with the penny

and the paper dollar.

[TheMadMonk]

2. We did it years ago in Aust. 1c & 2c coins. And yes round up/down.

Electronic transactions are still for the exact amount.

Listed prices remained those psychologically attractive $99.99, $9.98, etc. Some still are, but I've noticed recently that round dollar prices are becoming a lot more common. Probably to keep reaping those 1 & 2 c as more and more people put it on the card.

[murphyj87]

8. This amounts to....

A new tax of up to 4%, since merchants can "round" $0.96 items to $1 with impunity, but most of the benefit will be to the Canadian Republican Americanization government.

Another new tax is a $6000 tax on 65 year olds, and a $6000 tax on 66 year olds, since the OAS they are owed will be in the pockets of the Canadian Republican Americanization government, as it would be with a tax.

[laundry_queen]

10. That's not how it works from what I understand.

If you use a debit card, you will pay to the penny. If you pay cash, only the total price of the purchase will be rounded up or down.

Don't get me started on OAS however.

[murphyj87]

11. That's what Canadian Republicans hope.....

That's what Canadian Republicans HOPE will happen with rounding, but there is nothing more than a hope for it to happen that way. There is no regulation to have that happen, and merchants will be able to do whatever they want with rounding, and you can bet a pay cheque that $ 0.96 items will go to $1, and be, in effect, a hidden tax of up to 4%.

[laundry_queen]

12. You do understand there is no point to them doing that, right?

Whatever gains they would make in their contribution margins would be offset by the losses because of the psychological effect of having to pay more makes us buy less. People nearly always buy more at .99 then at $1.

[murphyj87]

13. Outright Profit?

If there are no pennies, every merchant will be doing it, so the choice is buy it at the higher price or don't buy it anywhere, and the GST on the higher price, as well as the savings from not making pennies, goes right to Harper's Canadian Republican government as a tax increase.

[laundry_queen]

14. That's what contribution margin alludes to.

And what I'm saying is whatever company does do it, will possibly lose an equivalent amount on the psychological side. With competition, you will have several stores who might raise prices citing the loss of the penny, and you will also have stores that will advertise .96 price points to get market share. Pricing a product is a complicated thing and stores don't just pick a price out of the air. A higher price and thus higher contribution margin is not always better if you lose market share and thus lower your profit.

I don't think you are getting how it works. They aren't going to round up each product to eliminate the need for pennies. They are going to round the final amounts only if someone is paying cash. Sometimes that will mean rounding down, in which case the Harper government will lose GST on THAT particular transaction. It evens out.

I really don't get the outrage. It's not an additional tax.

[murphyj87]

15. The Canadian Republican party...

claims that it didn't raise taxes, but there several de facto new taxes and amounts downloaded to the provinces that will raise provincial taxes for no other reason but the 2012 federal budget, the effect of eliminating pennies being one of them.

--------------------------------------------------------------------------------------

According to monthly polls by the Canadian Association of Retired Persons (i.e Seniors), in May 2011, 65% of CARP members (Seniors) voted Conservative.

According to the April 2012 poll, if the election were held now, 32.8% of CARP members (Seniors) would vote Conservative (down from 65% in May 2011) and even 23.4% of CARP members (Seniors) would now vote NDP.

The April 2012 CARP poll also shows that:
- 51.4% of CARP members say there is no good reason to change the age for OAS
- 71.9% of CARP members say the budget is bad for Seniors
- 61.2% of CARP members say that budget WILL NOT help Canada grow and achieve prosperity.

[laundry_queen]

16. Way to avoid the topic.

Not sure what the second half of your post is about or how it is related to the convo - was that your attempt at a segue? Perhaps you should start an OP with it. Conservatives are no friends of seniors. Or children. Or anyone else. Just the 1% and the deluded who think that tax cuts will somehow magically make them the 1% - or at least keep everyone else they know out of the 1%.

But I still say the penny thing is not a new tax.

[Joe Shlabotnik]

3. I think its a populist sounding, headline grabbing diversion.

Production cost, inflation and inconvenience have made this move a no-brainer for a long time. What concerns me more is whats buried in the budget. This is the Conservatives first majority budget, and they have the power to set the long term agenda without worrying about consequences. Eliminating the penny will keep talking heads on TV from discussing raising of the retirement age, MP pension reform, gutting of environmental regulations, and squeezing the CBC. Also Its another step towards a cashless, airtight controlled economy

[applegrove]

4. It worked to divert me. That is the only thing I picked up on on the local news at 6PM. Did not know

about the CBC being cut. By how much?

[Joe Shlabotnik]

5. I think it is $115,000,000 over 3 years *I think*

I haven't had time to read much or dig into the details. Last night I read a leak about the retirement age going up to 67, and a shallow sounding plan about reducing MP pensions too, but today all I heard about on the noooz was: PENNY!

[applegrove]

6. I'm sure Mansbridge will have more on it at 10:00 PM.

[Posteritatis]

7. I'm happy to see them go, but I do think this is about the timing

Nobody's talking about anyone else in the budget, and they definitely aren't talking about the rigged election anymore. (They also aren't talking about Elections Canada's funding getting cut in the budget.)

[polly7]

9. I think it's been a long time coming, but yes, it is interesting timing.