Canada ditches the penny(globaltvedmonton.com)
globaltvedmonton.com
Canada ditches the penny
http://www.globaltvedmonton.com/money/penny+to+disappear+from+coinage+system+minting+to+end+by+fall+budget/6442610744/story.html
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from reddit:
SR&ED is [reorganized.]
I was hoping for SR&ED to be completely axed. It's a huge monstrosity of paperwork, to the point that small businesses pay 30% of their tax credits to consultants who fill out the forms for them and large businesses hire teams of people for the sole purpose of tracking and classifying SR&ED expenses so that the tax credits can be claimed. I suspect that Tarsnap is eligible for some SR&ED credits, but it's simply not worth the time and headaches it would cost me to claim them.
If Canada wants to encourage innovation, they should set up a system which rewards people for doing new and innovative things, not a system which rewards people for being good at filling out forms.
If Canada wants to encourage innovation, they should set up a system which rewards people for doing new and innovative things, not a system which rewards people for being good at filling out forms.
I've filed SR&ED claims for multiple years for a successful startup. It was a) incredibly valuable and b) incredibly easy.
That said, I do know there are plenty of zombie companies that filed SR&ED claims with a bunch of handwaving and hogwash in it. In fact, it was recommended to me to not make any project sound like it's finished: that way, you can file again next year.
But if you waste 30% of your credit on consultants, you're the one being an idiot, not the government.
That said, I do know there are plenty of zombie companies that filed SR&ED claims with a bunch of handwaving and hogwash in it. In fact, it was recommended to me to not make any project sound like it's finished: that way, you can file again next year.
But if you waste 30% of your credit on consultants, you're the one being an idiot, not the government.
I've successfully written SR&ED applications myself for businesses certainly less deserving than Tarsnap. We decided the consultants were too expensive and gave it a shot ourselves. One solid week of work for one guy at a company of 10 people netted $30,000, definitely worth the time. All you need is a decent record of work done (I used both github commit log and a bug tracker.)
Unfortunately I expect you'll never get money from a bureaucrat without a little paperwork. Still, you're missing out if you don't even try.
Unfortunately I expect you'll never get money from a bureaucrat without a little paperwork. Still, you're missing out if you don't even try.
Talk to Ernst & Young. They will help startups file for SR&ED for a flat fee of $1-3k. Takes a few hours to draft the document with their help. It is not as hard as it sounds.
While it is a big headache to trac, document work and formulate and application, it is most definitely worth it. I've been part of a team that has claimed small sr&ed pieces of work and managed to get back a substantial credit. I agree that there should be a more stringent vetting of applications as this is our tax payer money we're talking about.
From what I've heard, they're getting rid of tax credits and moving more to an RFP or grant-based system.
From skimming the news it seems like it's cut significantly.
>The changes include a cut in 2014 to 15 per cent from 20 per in the tax credit rate and a restriction on which expenditures count toward the credit. For example, capital expenditures – buildings, equipment and product prototypes – will no longer be eligible. The amount of eligible overhead expenses and subcontracted R&D will also be reduced.
http://www.theglobeandmail.com/report-on-business/economy/gr...
Bad news for Canada's tech innovators.
>The changes include a cut in 2014 to 15 per cent from 20 per in the tax credit rate and a restriction on which expenditures count toward the credit. For example, capital expenditures – buildings, equipment and product prototypes – will no longer be eligible. The amount of eligible overhead expenses and subcontracted R&D will also be reduced.
http://www.theglobeandmail.com/report-on-business/economy/gr...
Bad news for Canada's tech innovators.
[deleted]
how is this even remotely a smokescreen? it will save money and lower costs for businesses in the long term.
I believe he's arguing that this is a good change that will get a lot of press. With that creating an opportunity to make a lot of bad changes while everyone is focused on this.
Not being up on Canadian politics, I won't take a position on whether or not that is correct, except that the US is in the same boat and I would like it if they would get rid of our penny.
I know there are people who say it's traditional and whatnot, but I don't see anyone clamoring to bring back two or three cent pieces.
Not being up on Canadian politics, I won't take a position on whether or not that is correct, except that the US is in the same boat and I would like it if they would get rid of our penny.
I know there are people who say it's traditional and whatnot, but I don't see anyone clamoring to bring back two or three cent pieces.
I'm not very familiar with canadian politics. Why is it amusing that the NDP proposed this?
This isn't the Canadian Budget; it's the budget proposed by the ruling Conservatives. This item will likely generate the most buzz and goodwill for the budget, and it was proposed by the current Opposition NDP, who are socialists.
So, the greatest PR windfall for the Conservatives will have come from their biggest ideological and political opponents. It's mildly entertaining.
That said, as the Conservatives have a majority (>50% of seats in the House of Commons), there's no chance that the budget would fail, triggering a vote of non-confidence and a general election. So it wasn't a vote that had any real importance politically, but it will serve to generate public goodwill, which they could use. The Conservatives currently only have a majority because of the ineptitude of the Liberals and Quebecers' fatigue with the Bloc Quebecois. Most Canadians are to the left of the Conservatives, have only warily entrusted them with power, and only then because the center-left liberals couldn't get their shit together at election time.
So, the greatest PR windfall for the Conservatives will have come from their biggest ideological and political opponents. It's mildly entertaining.
That said, as the Conservatives have a majority (>50% of seats in the House of Commons), there's no chance that the budget would fail, triggering a vote of non-confidence and a general election. So it wasn't a vote that had any real importance politically, but it will serve to generate public goodwill, which they could use. The Conservatives currently only have a majority because of the ineptitude of the Liberals and Quebecers' fatigue with the Bloc Quebecois. Most Canadians are to the left of the Conservatives, have only warily entrusted them with power, and only then because the center-left liberals couldn't get their shit together at election time.
The party that implemented this is the Conservative party, the right-most mainstream party. The two parties generally don't see eye to eye, to put it lightly.
The Conservative party was decimated years ago and was nearly eliminated then eventually the Reform Party which became the Canadian Alliance merged into the Conservative party (both parties were dead anyway).
Reformers were certainly farther right compared to the members of the old Conservative party. Now there is a Conservative party it's the same skin on the outside but fundamentally different, it couldn't be more different, it's pretty much the Reform Party 2.0 yet people see "Conservative Party" and vote for it.
That's my take on it anyway.
Reformers were certainly farther right compared to the members of the old Conservative party. Now there is a Conservative party it's the same skin on the outside but fundamentally different, it couldn't be more different, it's pretty much the Reform Party 2.0 yet people see "Conservative Party" and vote for it.
That's my take on it anyway.
It's difficult finding a comparison since the US only has a two-party system.
Maybe an example something like Ralph Nader suggesting something and Nixon doing it.
Or more modern George W Bush following the advice of Jon Stewart.
Anyway (the far?) right agreeing with the left is odd.
Maybe an example something like Ralph Nader suggesting something and Nixon doing it.
Or more modern George W Bush following the advice of Jon Stewart.
Anyway (the far?) right agreeing with the left is odd.
Not particularly far to the right.
Setting aside the Quebec-only Bloc, the three main parties in Canada are center-right, centrist, and center-left. They all like to claim the others are extremists, but all of them have perfectly mainstream views.
Setting aside the Quebec-only Bloc, the three main parties in Canada are center-right, centrist, and center-left. They all like to claim the others are extremists, but all of them have perfectly mainstream views.
There's another party! And yeah, she's pretty centrist too.
Except for that whole "wifi is going to irradiate us" stance.
Say that it's a "smoke screen" is needlessly partisan. It is, indeed, a line item. It deals with something that has come up for consideration since the 80s. If it gets attention, it gets attention.
But do you think no one notices the other changes because they're ditching the penny? That is preposterous.
But do you think no one notices the other changes because they're ditching the penny? That is preposterous.
Memo by Jo Moore, British special adviser and press officer, 2.55pm on September 11, 2001:
> It's now a very good day to get out anything we want to bury. Councillors' expenses?
It's an extremely common practice to release unpopular information, or pass unpopular bills when something else is bound to hit the front page.
> It's now a very good day to get out anything we want to bury. Councillors' expenses?
It's an extremely common practice to release unpopular information, or pass unpopular bills when something else is bound to hit the front page.
[deleted]
The penny change in no way is distracting from other parts of the budget, and as tabbyjabby mentioned it is focused on here because it has cross-border novelty that the other parts of the budget don't. But among Canadians it is a meh change -- we electronically pay for almost everything now, so the nickle will follow in short order.
It might be construed as a partisan comment, but that is exactly how politics works. After working on a few campaigns (and leaving in disgust), a politician or party will gladly pocket an easy but visible decision like this in order to "steal eyes" away from other -- less positive -- changes or events.
Ok, but in this specific case, the premise of this being an item that is stealing attention away from the more significant cuts in the budget simply isn't consistent with reality. Go to any national Canadian newspaper. The headline will not refer to the elimination of the penny; it will refer to changes to Old Age Security, or cuts to the CBC. The penny has been but a footnote to budget news. The reason that is the only item of the budget getting attention on HN is because I don't think any non-Canadian HNers really care that our retirement age is now 67, or that health transfers to the provinces have been reduced in this budget.
The newspaper headline doesn't matter; what they're aiming for is controlling the message that's shared over coffee between friends, at the water-cooler, on the office IM feed, etc. In that context, all anyone will talk about is cutting the penny.
If this seem familiar, last time around it was changing the words to O Canada (http://www.cbc.ca/news/arts/music/story/2010/03/03/o-canada-...).
If this seem familiar, last time around it was changing the words to O Canada (http://www.cbc.ca/news/arts/music/story/2010/03/03/o-canada-...).
I concur.
The reason this topic generates chatter is because its simple to understand. My teenage sister gets it, my 7 y/o gets it, the homeless person at Union understands and the Bay St exec gets it. Its not obviously complicated. It takes $0.16 to make a penny. Its eradication will save millions in Gov't spending. "It costs 1.6 Canadian cents to produce each one cent coin and stamping out the penny will save around C$11 million ($11 million) a year." (1)
The other proposed budget topics aren't so easily understood by the general public. Old Age Security? Greater than 40% of Canadians are <30 years old (2). This isn't likely to be the prevailing conversation topic. CBC? Canadian Crown Corporation? Really? Who knew? Who cares? Who understands the impact?
I don't think mass media has conspired to fool the common man (in this case anyway). Its just a simple conversation topic.
Edit: There really isn't any complication since only cash payments are effected (3)
(1) http://news.nationalpost.com/2012/03/30/canada-penny-federal...
(2) http://www40.statcan.gc.ca/l01/cst01/demo10a-eng.htm
(3) http://www.budget.gc.ca/2012/themes/theme2-info-eng.html
The reason this topic generates chatter is because its simple to understand. My teenage sister gets it, my 7 y/o gets it, the homeless person at Union understands and the Bay St exec gets it. Its not obviously complicated. It takes $0.16 to make a penny. Its eradication will save millions in Gov't spending. "It costs 1.6 Canadian cents to produce each one cent coin and stamping out the penny will save around C$11 million ($11 million) a year." (1)
The other proposed budget topics aren't so easily understood by the general public. Old Age Security? Greater than 40% of Canadians are <30 years old (2). This isn't likely to be the prevailing conversation topic. CBC? Canadian Crown Corporation? Really? Who knew? Who cares? Who understands the impact?
I don't think mass media has conspired to fool the common man (in this case anyway). Its just a simple conversation topic.
Edit: There really isn't any complication since only cash payments are effected (3)
(1) http://news.nationalpost.com/2012/03/30/canada-penny-federal...
(2) http://www40.statcan.gc.ca/l01/cst01/demo10a-eng.htm
(3) http://www.budget.gc.ca/2012/themes/theme2-info-eng.html
> "steal eyes" away from other -- less positive -- changes or events.
How is cutting waste less positive? They're conservatives. They get bonus points for cutting things. Now, if they passed tax increases, then you've got a point.
How is cutting waste less positive? They're conservatives. They get bonus points for cutting things. Now, if they passed tax increases, then you've got a point.
There's cutting fat, then there's cutting muscle.
The two aren't too similar, but I wouldn't want anyone cutting into me who wasn't a surgeon.
Now with politics, we often have people who claim to cut waste, but are perceived as cutting necessary programs.
The two aren't too similar, but I wouldn't want anyone cutting into me who wasn't a surgeon.
Now with politics, we often have people who claim to cut waste, but are perceived as cutting necessary programs.
Cutting spending is positive among their base, which is about a third of Canadians. The rest typically wouldn't vote Conservative. They and the NDP simply split the Liberal and Bloc vote in the last election.
You may view the CBC and Healthcare as waste; the vast majority of Canadians do not. Harper wants more than anything to convince Canadians that the Conservatives are trustworthy. The last thing he wants is for Canadians to be sick of them by the time the next election rolls around, especially if the Liberals manage to find a halfway competent leader.
That's why Harper's been as centrist as he has, and that's why cuts to popular programs are being delivered alongside this news. He'll stay true to conservative values, but only insofar as they don't hurt his re-election chances.
You may view the CBC and Healthcare as waste; the vast majority of Canadians do not. Harper wants more than anything to convince Canadians that the Conservatives are trustworthy. The last thing he wants is for Canadians to be sick of them by the time the next election rolls around, especially if the Liberals manage to find a halfway competent leader.
That's why Harper's been as centrist as he has, and that's why cuts to popular programs are being delivered alongside this news. He'll stay true to conservative values, but only insofar as they don't hurt his re-election chances.
Or Harper could just be a fairly centrist politician - after all, there's no better time in Canadian politics to push through radical change than the earliest stages of a majority government, something Harper has never previously had. If his 'true colors' were ever going to show, it'd be right now.
Not everything has to be a conspiracy theory.
Not everything has to be a conspiracy theory.
Cutting spending is positive among their base, which is about a third of Canadians.
Cutting spending is a positive among all Canadians. The Liberals had their most populous years when they were responsible for -- and still deserve credit for -- brutal spending cuts (health care transfers, services, etc) that balanced the budget.
While HN isn't the place for discussions like this, it really is hard to rationalize some claims against conservatives with reality. The Conservatives are currently running the largest budgets in Canadian history. They increased transfers to the provinces more than any other government (some would say naively and rashly, making promises that health care spending, for instance, could just increase exponentially forever). They cut the military budget.
But if you read what you just wrote you would think that they were a slash and burn government. Hardly.
It's also worth noting that Harper has the most liberal reign to do what he wants right now, given that he doesn't have to face an election for another four years and memories are infamously short in Canada. He doesn't need to pander to the masses right now, at all, and the same-old "trying to hide the hidden agenda" bits grow enormously tiresome, bringing the sort of ignorance, baseless partisan noise into the discussion that we see too often South of the border.
Cutting spending is a positive among all Canadians. The Liberals had their most populous years when they were responsible for -- and still deserve credit for -- brutal spending cuts (health care transfers, services, etc) that balanced the budget.
While HN isn't the place for discussions like this, it really is hard to rationalize some claims against conservatives with reality. The Conservatives are currently running the largest budgets in Canadian history. They increased transfers to the provinces more than any other government (some would say naively and rashly, making promises that health care spending, for instance, could just increase exponentially forever). They cut the military budget.
But if you read what you just wrote you would think that they were a slash and burn government. Hardly.
It's also worth noting that Harper has the most liberal reign to do what he wants right now, given that he doesn't have to face an election for another four years and memories are infamously short in Canada. He doesn't need to pander to the masses right now, at all, and the same-old "trying to hide the hidden agenda" bits grow enormously tiresome, bringing the sort of ignorance, baseless partisan noise into the discussion that we see too often South of the border.
I'll agree that HN isn't the place for this discussion. I will say, however, that if what I wrote comes across as me thinking he's "hiding his true intentions", that's not what I intended. Rather, he doesn't want to give voters, many of whom would not normally vote Conservative (and didn't when the libs had strong leaders) reason to distrust them. It's not a conspiracy; he's just playing a long game and trying to set up the Conservatives as Canada's new Natural Ruling Party (r).
A brilliant decision. Now if we could only get rid of our 1 euro cent here.
According to some inflation figures I quickly found on the internet, a (US dollar) penny had a hundred years ago 23 times as much buying power as a penny nowadays. That means the smallest denomination was then was worth almost as much as a quarter is now! People could get by without smaller coins then and they should be able to work perfectly fine now without worthless pennies.
According to some inflation figures I quickly found on the internet, a (US dollar) penny had a hundred years ago 23 times as much buying power as a penny nowadays. That means the smallest denomination was then was worth almost as much as a quarter is now! People could get by without smaller coins then and they should be able to work perfectly fine now without worthless pennies.
Even better: the US used to have a half-cent but they abolished it in 1857 due to its lack of value. With inflation, it's worth more than today's dime.
For a few years during the transition to decimalisation, the UK had a half penny also.
http://en.wikipedia.org/wiki/Halfpenny_(British_decimal_coin...
http://en.wikipedia.org/wiki/Halfpenny_(British_decimal_coin...
Move to the Netherlands. The one-euro-cent and two-euro-cent bits don't exist here unless you're doing a bank transaction; cash transactions get rounded to the nearest 5 cents.
This isn't all true: The US used mills (1/1000 of a dollar) up until the 1960's.
http://en.wikipedia.org/wiki/Mill_(currency)
http://en.wikipedia.org/wiki/Mill_(currency)
Just as a point of interest, Australia removed the 1 and 2 cent coins from circulation back in 1992. Prices have been rounded to the nearest 5 cent value when paying with cash ever since. A comment on this thread said that it's madness, but it's all someone my age has grown up with.
As a fellow Australian the pennies aren't what I found most bizarre about US and Canadian currency, I more often found myself getting tripped up by the fact that listed prices in US and Canadian stores never include sales tax.
When Canada introduced its federal Goods and Services Tax in the early 1990s, the government wanted to have it included in advertised prices; but under Canada's constitution the regulation of business advertising is a matter of provincial jurisdiction, and the provinces didn't want to play ball.
Most stores in the US don't include sales tax in the listed price, but some do. Examples include vending machines, Starbucks and other coffee shops (but not usually locations inside book stores and supermarkets), and concession stands at concerts, sporting events, and fairs. They probably do it because they don't want to deal with pennies. Concession stands often go further and use whole dollar amounts, since the prices are high anyway.
IIRC, some post office vending machines will take pennies, because they can sell stamps one at a time.
IIRC, some post office vending machines will take pennies, because they can sell stamps one at a time.
When I was in grad school there was a pizza-by-the-slice place where all prices were tax-included and an exact multiple of 25c. The only coins in their register were quarters. If you gave them any other coin, they counted it out and dumped it in a jar next to the register. A manager claimed that it was way more efficient and easy to count that way (and throughput mattered a lot during busy times). It also meant that a large percentage of the time the customers had exact change counted out before they even got to the register, which meant they didn't even need to make change and throughput increased further.
At least in the US, sales tax is assessed locally, so it can vary even within a particular region. Dealing with fixed prices and additional sales tax is the only reasonable way to run a business that crosses multiple localities.
What about gas prices? The displayed price is what you actually pay, it always includes all the taxes.
I guess the businesses are not required to do this for other products and naturally they choose to display the lower price, i.e. the one excluding taxes.
I guess the businesses are not required to do this for other products and naturally they choose to display the lower price, i.e. the one excluding taxes.
Gas prices vary from street to street. People expect that.
On the other hand, a cleaning product from target costs $2.99 (plus tax) no matter where I live.
On the other hand, a cleaning product from target costs $2.99 (plus tax) no matter where I live.
Yeah, for whatever reason most (all?) states have decided to specifically require that advertised gasoline prices include all taxes and fees, but haven't done the same for other products. Though there are some moves afoot to require it for mobile telephone contracts as well.
Probably because many people want to purchase exactly $X of gas.
We need to follow NZ's lead and ditch the five cent coin next. Even 10c pieces are a waste of time. Can't think of many cash transactions in my daily life where it would bother me to round to the nearest 20c. Certainly not dinner or a round of drinks, lunch, a full bag of groceries, etc.
There are several thousand, if not million of Australians that would disagree. The ability to round prices by ten or twenty cents at a time is a luxury that cannot be afforded by everyone.
What? If you remove coins and round to the nearest payable amount, it evens out over time. Sometimes you'll pay less than the actual total, sometimes you'll pay more. Prices aren't magically going to increase, so how is this a luxury?
If I ran a large business, I would certainly look at the most-common purchases and combinations of purchases (especially low-cost items, like a candy bar) and consider tweaking prices so I gained rather than lost two pennies on my most common transactions.
Places with limited and standardized menus, like fast-food restaurants, could do this quite easily.
Enough businesses do this, and things no longer even out over time.
Places with limited and standardized menus, like fast-food restaurants, could do this quite easily.
Enough businesses do this, and things no longer even out over time.
Reminds me of an anecdote about a woman who balanced her checkbook by rounding all amounts to the nearest dollar. Her father eventually heard about this, freaked out, and re-tallied everything — and ended up within a dollar of her previously-computed balance.
"They cost more to produce than they are worth, nobody likes them, they have no commercial value."
My very first (very primitive) public facing webpage was dedicated to abolishing the Canadian penny. Good riddance!
My very first (very primitive) public facing webpage was dedicated to abolishing the Canadian penny. Good riddance!
CGP Grey has an excellent youtube video on the whole issue for the US. The US currently makes 4 billion 1 cent coins annually. And they have already been abolished at US military overseas bases.
http://www.youtube.com/watch?v=y5UT04p5f7U
(Come to think of it, doesn't the US military use a lot more metric system than the general population. If so, this would be a good reason to increase the military since it would appear to be the only way progress happens!)
http://www.youtube.com/watch?v=y5UT04p5f7U
(Come to think of it, doesn't the US military use a lot more metric system than the general population. If so, this would be a good reason to increase the military since it would appear to be the only way progress happens!)
The US military also uses a 24-hour clock (2000 hours instead of 8:00 PM) and consistent little-endian date formats (29 March 2012 instead of March 29 2012).
That does it. I'm now in favour of compulsory military service for everyone, since that is the only way US citizens will be modernized.
"And some old adages will likely fade away, too."
Australia hasn't had pennies since the sixties and we still use phrases like "in for a penny, in for a pound."
Australia hasn't had pennies since the sixties and we still use phrases like "in for a penny, in for a pound."
The US hasn't had pounds for centuries and we still use phrases like "in for a penny, in for a pound". :)
Does that mean pricing psychology would work differently? 19.99 would be out of fashion?
It will turn into 19.95 to keep the same psychology. Many stores already vary the last digit to mark the status of the item. Such as 97 for clearance items and so on.
actually, it'll be $20.00
I sure wish it would. I never really understood the supposed psychology behind .99 and .95. To me, three nines looks less welcoming than three zeros.
It's so it doesn't cross the subconscious barrier of "under 20 dollars". $99.99 doesn't cross the subconscious barrier of $100 for example. It's probably been A/B tested to death, since it's so widespread among retailers.
Wow. I'd like to think people aren't wired like that, but I guess subconsciously there's lots of exploits like this.
In New Zealand our lowest denomination is 10c but retailers still use that pricing tactic. Electronic card transactions are very popular here and they are charged to the advertised price while cash transactions are simply rounded to the nearest 10th.
Is that misleading? Advertising for 19.99 but charged at the rounded up 20.00.
[deleted]
I suspect that POS software vendors will make billions of pennies selling upgrades.
I wonder how this will affect sales taxation, as the tax rate isn't a multiple of 5 in all provinces, and hence the amount of tax collected on a purchase will have to be either be rounded down or up.
"If the customer has the pennies, they can use them. Payments with debit or credit cards, or cheques, can also be to the penny. But if the customer is paying cash and doesn't have the pennies, the total will go up or down to the nearest nickel."
I gather that's post application of sales tax.
I gather that's post application of sales tax.
Presuming a uniform distribution of price endings, existing pennies are then worth 1.43 cents (you only spend them when the price is congruent to (0.03 or 0.04) mod 0.05).
Now is a good time to buy up all the pennies for cheap. Melt them down the day they're abolished and sell it all as scrap metal (or don't sell if you think it'll hold value like gold does).
Great in a way that it costs more money to produce a penny than what it's worth.
This is simply patching over the underlying problem - dilution in the money supply. There is no reason why countries like the US and Canada who have only become a lot wealthier in the last 200 years should have such inflation. Stop printing money, and the penny will remain valuable!
i wonder if Canada has that bit, where the prices you see in the store are the final prices(i..e with tax already calculated in)
No, the prices are before tax. I think there is even a law against showing prices with tax for whatever reason.
There's no law against it (some places do this, most notably street carts, etc.), but if you were a cafe owner would you really want to put 15% higher prices on your menus? People would look at the numbers and leave, rather than noticing the 'taxes included' and having to do math.
Until it's a legislated requirement (and boy do I wish it were), we're probably not going to see it very often other than with fungible cash-only vendors.
Until it's a legislated requirement (and boy do I wish it were), we're probably not going to see it very often other than with fungible cash-only vendors.
I thought they don't include tax so they don't have to change it every time the tax rate change.
I suspect pricing of goods changes more often than sales tax rates.
Showing before tax prices (almost) makes sense in the US where every other street has it's own local tax rates. But Canada only has federal and provincial taxes so I suspect it's just to make the price look better - especially if you are comparison shopping with the US
The glory of central banking.
http://coinflation.com/
http://coinflation.com/
[deleted]
Ridiculously simple solution: Drop the hundredths place entirely. Kill pennies, nickels, quarters, bring back $.5 pieces.
A tenth of a dollar is enough precision for any realistic transaction in the United States.
A tenth of a dollar is enough precision for any realistic transaction in the United States.
New Zealand removed the 5c coin form circulation in 2004, leaving us with $2 ,$1 , 50, 20c and 10c coins. Electronic card transactions are charged to the nearest cent and cash transactions are rounded to the nearest 10th.
The transition was straight forward and I didn't hear any complaints.
The transition was straight forward and I didn't hear any complaints.
It works like that in Denmark as well; credit/debit transactions are charged to the full 0.01 kr precision (an absurdly small amount, about 1/10 of a eurocent), but cash transactions are rounded to the nearest 0.5 kr.
A simpler solution would be to just round every transaction to the nearest 5 cent, which is the scheme that most countries that drop the penny follow.
Like dollar coins and $2 bills, 50-cent pieces never went away. People just don't spend them because they're "rare", and hence they appear to be rare.
Simple in concept, difficult in execution. How would you recommend the transition between the two systems be handled?
Stop minting pennies, nickels, and quarters; start minting 20 cent pieces and mint more 50 cent pieces; let the free market sort it out. I'm not being flippant, it would actually work, at least as far as not wasting money producing low-value coinage is concerned.
Or, just skip the 20 cent and let 10/50 be the only subdivisions. (Currently, we get by with 1/5 and no 2.)
Frankly, if we're talking radical reform I'd rather keep the quarter and ditch the dime; even 10c seems too small to fiddle with most of the time, so 25c is the smallest denomination that seems worth bothering with. (Also, it's ubiquitous in mechanical coin-op devices like laundry machines, pool tables, etc.)
Frankly, if we're talking radical reform I'd rather keep the quarter and ditch the dime; even 10c seems too small to fiddle with most of the time, so 25c is the smallest denomination that seems worth bothering with. (Also, it's ubiquitous in mechanical coin-op devices like laundry machines, pool tables, etc.)
I actually wouldn't mind doing away with coins altogether and going with whole dollar amounts. I hate having to carry around change!
australia did this in 1992. git rid of the 1c and 2c coins. we have 5c pieces. currently living in the US, and I cannot stand pennies.
Is the ditching of the penny an alarming event like the addition of a zero on the largest denomination of currency? Why do I work hard to exchange my labor for money that is being inflated on purpose?
To exchange that money for goods. To invest those money into something that will bring you more money back.
If the customer has the pennies, they can use them. Payments with debit or credit cards, or cheques, can also be to the penny. But if the customer is paying cash and doesn't have the pennies, the total will go up or down to the nearest nickel. For example, $1.02 will become $1 and $1.03 will be $1.05.
Something just feels wrong about rounding. The customer would always get screwed. They should solve this problem by using the federal sales tax to round up/down. $1.25 + 5% = 5¢ of tax instead of 6.25¢.
That said, it would make sense for merchants to round down for cash purchases. It would be a tiny incentive to use cash rather than credit cards (which cost the merchant 2-4%)
Something just feels wrong about rounding. The customer would always get screwed. They should solve this problem by using the federal sales tax to round up/down. $1.25 + 5% = 5¢ of tax instead of 6.25¢.
That said, it would make sense for merchants to round down for cash purchases. It would be a tiny incentive to use cash rather than credit cards (which cost the merchant 2-4%)
It's a round, not a ceiling function. If you were going to pay .98, .99, .00, .01, or .02 you will now pay .00; whereas if you were going to pay .03, .04, .05, .06, or .07 you will now pay .05 . In other words, after the very first interval of 5 cents (about $0 even) each numeral gets 5 incoming numbers associated with it.
The only people who could really try to steal pennies from everyone would be supermarkets, and they would face the problem that it's too broadly peaked -- people going to the supermarket will buy between two and twenty things, and modulo 5 that sum is not easy to predict or steer.
The only people who could really try to steal pennies from everyone would be supermarkets, and they would face the problem that it's too broadly peaked -- people going to the supermarket will buy between two and twenty things, and modulo 5 that sum is not easy to predict or steer.
> They should solve this problem by using the federal sales tax to round up/down. $1.25 + 5% = 5¢ of tax instead of 6.25¢.
I see nothing but confusion there.
$1.25 + $0.05 = $1.30. After rounding, $1.30.
$1.25 + $0.0625 = $1.3125. After rounding, $1.30.
> It would be a tiny incentive to use cash rather than credit cards (which cost the merchant 2-4%)
Dealing with cash instead of credit cards is also a similarly percentaged inconvenience - that's why they're getting rid of the penny in the first place!
I see nothing but confusion there.
$1.25 + $0.05 = $1.30. After rounding, $1.30.
$1.25 + $0.0625 = $1.3125. After rounding, $1.30.
> It would be a tiny incentive to use cash rather than credit cards (which cost the merchant 2-4%)
Dealing with cash instead of credit cards is also a similarly percentaged inconvenience - that's why they're getting rid of the penny in the first place!
> They should solve this problem by using the federal sales tax to round up/down. $1.25 + 5% = 5¢ of tax instead of 6.25¢.
Wouldn't work except in Alberta, NWT, the Yukon, and Nunavut. Anywhere else, the provincial sales tax would knock it back off a multiple of 5.
Wouldn't work except in Alberta, NWT, the Yukon, and Nunavut. Anywhere else, the provincial sales tax would knock it back off a multiple of 5.
That sounds like a nightmarish tax policy.
Moreover one of the best things for consumers was when the stock market changed quotes from fractions to cents.
Moreover one of the best things for consumers was when the stock market changed quotes from fractions to cents.
Moreover one of the best things for consumers was when the stock market changed quotes from fractions to cents.
Why?
Why?
Because it gave an advantage to market makers and large institutional traders. I can look for some of the research if you are interested...
This is from the SEC at the time: http://www.sec.gov/news/testimony/ts092000.htm
It should be a good starting point if you are interested. There was also a NYT article that was very succinct but I can not find the citation at the moment.
EDIT:
I'm at a loss for why this was downvoted. Decimalization is widely held to be a huge win for consumers. It's almost laughable to think otherwise.
From the NYT:
"There is a potential for investors to save hundreds of millions of dollars, but some of those savings are likely to be offset by increased commissions. Brokers have made substantial profits by pocketing the spread, and in some cases have been able to charge low commissions -- or, in extreme cases, no commissions -- on trades in stocks with large spreads, because of those profits.
It was the discovery that brokers in the Nasdaq market had been conspiring to keep spreads high on many stocks that began the inexorable move toward decimalization. The Securities and Exchange Commission imposed new rules last year that partly integrated electronic markets, like Instinet, that were previously available only to institutional investors, into Nasdaq. Suddenly, quotes with spreads of less than one-eighth were available." [1]
[1] http://www.nytimes.com/1997/06/06/business/so-long-fractions...
This is from the SEC at the time: http://www.sec.gov/news/testimony/ts092000.htm
It should be a good starting point if you are interested. There was also a NYT article that was very succinct but I can not find the citation at the moment.
EDIT:
I'm at a loss for why this was downvoted. Decimalization is widely held to be a huge win for consumers. It's almost laughable to think otherwise.
From the NYT:
"There is a potential for investors to save hundreds of millions of dollars, but some of those savings are likely to be offset by increased commissions. Brokers have made substantial profits by pocketing the spread, and in some cases have been able to charge low commissions -- or, in extreme cases, no commissions -- on trades in stocks with large spreads, because of those profits.
It was the discovery that brokers in the Nasdaq market had been conspiring to keep spreads high on many stocks that began the inexorable move toward decimalization. The Securities and Exchange Commission imposed new rules last year that partly integrated electronic markets, like Instinet, that were previously available only to institutional investors, into Nasdaq. Suddenly, quotes with spreads of less than one-eighth were available." [1]
[1] http://www.nytimes.com/1997/06/06/business/so-long-fractions...
This is correct if we replace consumers with retail traders.
Pricing in eighths guarantees a minimum bid-ask spread, what the market-makers make before adjustments, of an eighth. With pricing in cents the minimum spread is a penny spread.
Canada isn't changing pricing to twentieths - it's still priced to the cent, except cash transactions will be rounded to the twentieth unless the customer has pennies in which case they can pay in exact change. Thus I do not believe the comparison is apt.
Pricing in eighths guarantees a minimum bid-ask spread, what the market-makers make before adjustments, of an eighth. With pricing in cents the minimum spread is a penny spread.
Canada isn't changing pricing to twentieths - it's still priced to the cent, except cash transactions will be rounded to the twentieth unless the customer has pennies in which case they can pay in exact change. Thus I do not believe the comparison is apt.
I still don't understand how that is a win for consumers. If anything, my limited experience with the stock market tells me that market makers and HFT have been stealing cents on most transactions made by individuals since we've made the switch.
Stealing is a bit of a loaded word. The HFT algos provide immense liquidity to the market by, well, executing tons of transactions every second. This means when you decide you want to purchase 100 shares of a stock, one of the automated machines will try and sell you those shares for a slightly increased price to make a profit. Now the guys doing HFT would love to increase the price by 10% to sell you those shares, but since every single HFT computer sees that buy order, they quickly scramble to try and fill it. As a result, they focus on making a penny or two per share but executing the transaction in microseconds. By lowering their per share profit they can guarantee they will get the trade since otherwise another market maker will step in and offer the shares a penny lower. By executing tons of transactions a second they can make money doing this since they focus on buying/selling a large volume every day.
Back when all trades were performed by people it would be very difficult to trade with high precision numbers, but since the market makers all work on an automated basis, penny precision increases the resolution an algorithm can decide on the price to buy/sell a share. Since the algorithms are focusing on low profit but high volume, they will lower their profit to try and win the trade against the other market makers.
Why is this good for you? Unless you're trading thousands of times a day, you will only pay a tiny premium to the HFT guys as it's a race to the bottom for them (aka the current share price). They are focusing on speed, and as a result they can't spike up the price suddenly as the other algorithms will jump and and take the trade from them. This is the liquidity they provide to the market and also why when you place your order through your broker it goes through in seconds. If the minimum resolution was fractions of a cent that would be the resolution the algorithms would work at, so instead of paying a $0.01 per share premium you're paying a $0.125 per share premium since that's the minimum they can go while still selling for a profit. Before automated trading a real person would have to go out on the trading floor and try and find you some shares to buy. I can guarantee that you would pay a higher premium per share doing that vs having computers race each other to fill the order in microseconds.
Note: I glossed over a lot of information here and tried to simplify it a lot. It should give you a good idea why HFT is good for the individual investor though.
Back when all trades were performed by people it would be very difficult to trade with high precision numbers, but since the market makers all work on an automated basis, penny precision increases the resolution an algorithm can decide on the price to buy/sell a share. Since the algorithms are focusing on low profit but high volume, they will lower their profit to try and win the trade against the other market makers.
Why is this good for you? Unless you're trading thousands of times a day, you will only pay a tiny premium to the HFT guys as it's a race to the bottom for them (aka the current share price). They are focusing on speed, and as a result they can't spike up the price suddenly as the other algorithms will jump and and take the trade from them. This is the liquidity they provide to the market and also why when you place your order through your broker it goes through in seconds. If the minimum resolution was fractions of a cent that would be the resolution the algorithms would work at, so instead of paying a $0.01 per share premium you're paying a $0.125 per share premium since that's the minimum they can go while still selling for a profit. Before automated trading a real person would have to go out on the trading floor and try and find you some shares to buy. I can guarantee that you would pay a higher premium per share doing that vs having computers race each other to fill the order in microseconds.
Note: I glossed over a lot of information here and tried to simplify it a lot. It should give you a good idea why HFT is good for the individual investor though.
Before the change to decimalization the market makers were pocketing $1/8 and for a brief time $1/16.
http://www.reddit.com/r/canada/comments/rjrfn/the_budget_5_b...
Amusingly this particular cut was actually a private member proposal from the NDP (the left-most mainstream party).