HomeMy WebLinkAboutFCS-13-024 - Phasing Out of the Penny
REPORT TO:Finance and Corporate Services Committee
DATE OF MEETING:
February 25, 2013
SUBMITTED BY: Joyce Evans, Director of Revenue & Deputy Treasurer
PREPARED BY:
Joyce Evans
WARD(S) INVOLVED: All
DATE OF REPORT: February 19, 2013
REPORT NO.:
FCS-13-024
SUBJECT:
Phasing out of the Penny
RECOMMENDATION:
For information
BACKGROUND:
In the 2012 Economic Action Plan, the Government of Canada announced a proposal to
eliminate the penny from Canada’s coinage system. The Royal Canadian Mint stopped
minting new pennies in April of 2012 and ended the distribution of the penny on
February 4, 2013. The penny will retain its value indefinitely and continues to be used in
payments. As pennies are gradually withdrawn from circulation, price rounding on cash
transactions will be required. The purpose of this report is to inform Council of the City’s
approach to the phasing out of the penny.
REPORT:
Revenue staff have maintained an inventory of pennies to be used by all areas of the
City where cash payments are received until such time as the penny phase-out plan is
fully implemented. The City is in the process of making updates to the CLASS cashier
system to allow for the rounding of cash payments and is also finalizing a public
communication strategy on this issue.
The highlights of the City’s plan are as follows:
Citizens can continue to use pennies for cash transactions indefinitely. This
means that they can pay to the nearest cent if they are using pennies. This will
diminish over time as pennies are gradually withdrawn from circulation.
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As of Monday, March 4, 2013, when pennies are not used by citizens, cash
transactions will be rounded to the nearest five-cent increment in a fair and
transparent manner per Government of Canada guidelines as follows:
Amounts ending in 1 and 2 cents are rounded down to the nearest 10
o
cents;
Amounts ending in 3 and 4 cents are rounded up to the nearest 5 cents;
o
Amounts ending in 6 and 7 cents are rounded down to the nearest 5
o
cents;
Amounts ending in 8 and 9 cents are rounded up to the nearest 10 cents;
o
and
Amounts ending in 0 and 5 cents remain unchanged.
o
Non-cash transactions such as payment by cheque, credit and debit cards will
not be rounded and will still be paid to the nearest cent.
Signage providing appropriate information to citizens in respect to rounding will
be readily visible at all locations where cash transactions take place. Staff will
also publicize this information on the City’s web site and in Your Kitchener. This
signage is consistent with the recommendation provided by the Government of
Canada.
The penny rounding will not affect the calculation of tax and utility rates or billing.
HST will be calculated on the pre-tax price (where HST is applicable), and not on
the rounded price.
In preparation of the 2014 Fees and Charges Schedule, staff will review fee
structures, and make appropriate adjustments to minimize the amount of
rounding required at the point of sale.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
The approach outlined above supports the City’s strategic directions with respect to
communications, marketing and customer service which require the City to “make information
accessible through a variety of formats and ensure it is written in plain language that is easy to
understand by the city’s diverse range of stakeholders”.
FINANCIAL IMPLICATIONS:
The rounding of cash transactions is not expected to have a financial impact to the City.
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COMMUNITY ENGAGEMENT:
A communication strategy is under development and will include public signage, along with
communications via Your Kitchener and the City website.
ACKNOWLEDGED BY:
Dan Chapman, Deputy CAO
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