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Get rid of the Penny

By smithdm3 - Posted on 11 October 2007

Recently, the debate around whether or not to remove the penny from circulation seems to be escalating. Personally, I'm all for removing it. When I went to Australia in 2003, I had a chance to see how their policy works, and I must say, it works well.

The way they've done it is simply to remove the penny from circulation. If transactions are paid for in cash, they round up or down to the next nickel. If they are paid for by credit card or Interac-equivalent or whatever, they simply charge the amount to the penny. Seems to work pretty well for them, I mean, one would think (and I don't know how the math would exactly work out), that things would pretty much even out over time.

Now, as the article states:
Those who opposed the penny's death felt prices would increase as businesses "rounded up."

But, you see, this would really only matter on low, low prices where I suppose you could see a 2-3% round up of prices if they wanted to get to the next nickel for cash transactions. But for large priced items, really, the round up would be so negligible that why would you worry about it. In fact, in some ways, it might see prices driven downwards, as prices move away from 99 cents to 95 cents to still have that perceived cheapness.

I of course think we should eliminate it. Oh, and while we're at it, we should move to hidden taxes, that is, bundle them into the posted price. Another thing they do in Australia that I thought was reasonable and helpful.

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