On the penny…

I just have a couple comments on the government’s proposal to eliminate pennies in Canada.  I’ve blogged before about how I think it’s about fucking time we did it.

There are two major concerns I have with it though.

The first issue is something I mentioned in my post earlier today: the budget simply says “The government expects that businesses will apply rounding for cash transactions in a fair and transparent manner.”  This allows for a total Wild-West approach to cash register transactions, and could be a nightmare to consumers if there are no regulations, guidelines, or universal agreements on this.  They could apply Swedish rounding, as this CBC article suggests, and this would be the most fair method… but in the absence of regulation or government guidance, there is no way to ensure this will actually happen. The CBC’s assertion that “Businesses will not need to adjust their cash registers is bullshit – the amount of time cashiers will waste figuring it out themselves will be at best an inconvenience and at worst an opportunity for (albeit minor) fraud.  Updating their cash registers is essential.

The other issue is another point I made in that earlier entry about Australian consumer business – the GST/HST.  One of the reasons it is so easy to get by without pennies in Australia (and New Zealand, etc) is that their prices are tax-inclusive.  By law.  In Canada, the Excise Tax Act allows prices to be GST/HST-inclusive, but does not require it.  There are extensive rules about how to document the GST/HST charged on the invoice/receipt to ensure everything is fairly disclosed, but the price you see on the shelf will match the price you pay at the till.  And in virtually every case in Australia, there is no need for Swedish rounding, since prices are charged in multiples of 5 anyway.  They’ve accomplished multiple things at once – transparent pricing, and easy accounting for businesses.  Business can choose to do this in Canada, but since it’s difficult for one company to make the first move (it will appear as if they’re 5-15% more expensive than their competitors unless their competitors follow), very few actually do.  I’ve often considered doing this for my own business but, for the same reason, held back – why would I make my prices look higher than others’ even when they’re not?  If we create a level playing field by requiring GST/HST-inclusive pricing, we can accomplish both fairer pricing practices in Canada and less work for businesses.

In fact, I think I might even write the government and my MP about this. It seems like something they could be open to.


5 responses to this post.

  1. Posted by ivanvector on 2012/03/31 at 2:44 am

    What about setting your prices so that, when you charge G/HST, the result is a multiple of 0.05? It might take you[r accountant] some work up front, but you won’t necessarily appear more expensive, and customers just might appreciate the convenience.

    I agree that this should be mandated by the government though, or at least strongly recommended. Otherwise many businesses just won’t bother.


    • Charles is right – your idea is great, but would only work in single-item transactions. Once you start adding them together you end up having to round again, which would defeat the purpose.


  2. Ivan: An interesting thought… in BC to design a price that will create an exact multiple of 0.05 after adding 12% tax, I believe the original price must be a multiple of $1.25. However for ON with 13% tax, you need it to be a multiple of $5 which is much less flexible.

    You can design prices that, after rounding to the nearest penny, will be a multiple of 0.05, but once you put together a basket of multiple products, you’ll deviate and get back to having to do Swedish rounding.


  3. Posted by Andrea S. on 2012/03/31 at 7:12 am

    I don’t understand why people are so worked up over a few cents! If we do end up going the rounding route, the most extra anyone would have to pay is $0.04… or $0.03 less. To me that isn’t a big deal at all.

    I’m sure it will work itself out by the time it is brought into place, or soon after. People worry too much! We’re talking PENNIES here!


    • I’m not that worked up over it, I just think there are far more practical ways to do it. You’ve worked as a cashier, right? Imagine doing your job without pennies – sounds great, right? Much less time and effort wasted counting through those tiny coins. But now imagine if you had to do the rounding yourself (as CBC proposes you don’t have to update your registers), in your head, and on the spot, multiple times a day. Now you might be good with numbers, but not everyone is. And think of how much customers complain about prices and taxes to begin with — think how much easier it will be if, at the very least, your employer is doing the rounding in the same way as everyone else?

      Plus, imagine if the customers came to the till with the exact amount of cash required, including taxes, and just paid you then and there. It happens in Australia. It really does. People see the price on the menu/advertisement/shelf, they know exactly what they will pay at the till, and frequently will have the exact change ready for you by the time they get there. It’s wonderful 🙂


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