Posts Tagged taxpayers
Steel yourself, Canada, new one-dollar and two-dollar coins are about to become the latest version of the proverbial plugged nickel.
In an effort to save taxpayers about $16 million annually, new versions of the loonie and toonie will be introduced this spring made from steel, replacing the more expensive nickel found in the current versions of the coins.
A detailed summary of the change filed by the federal government in the Canada Gazette last month says the new coins will be slightly lighter, cheaper to produce and ship, and harder to counterfeit.
They’re also going to cost Canada’s coin-operated industries about $40 million in recalibration costs to make vending machines recognize the new coinage, says the government.
And businesses who count their coins by weight will have to first separate the old currency from the new.
The new coinage was announced in last year’s federal budget but only received final cabinet approval late last month.
The roll-out has been delayed in part because some manufacturers in the vending industry weren’t ready to handle the new coins, according to Kim Lockie, the past president of Canadian Automatic Merchandising Association.
“It only delayed it, it didn’t postpone it,” said Lockie, a Fort McMurray, Alta., businessman whose company has 1,200 machines that required reprogramming — a three-month project.
“We just have to be ready as operators to be able to accept that.”
Lockie, who spent last year as his industry association president dealing with the mint, said operators never like eating the cost of currency changes, but the process has been handled well by the government.
“It’s going to happen anyway so if we can partner we can both come out ahead — I can have ample leeway time to get my machines programmed,” he said in an interview.
The Canada Gazette says the current coins cost about 30 cents each to produce, while Kim says he’s been told the new loonies and toonies will cost between four cents and six cents apiece.
A spokesman for the Royal Canadian Mint had little so say, because a major media roll-out is planned nearer to the coins’ actual release. Alex Reeves did confirm the new coins are about to go into production and should be in circulation in “early spring” — likely late March or April.
When the new coins were first proposed, the expectation was that they would weigh exactly the same as the old versions.
Consumers likely won’t notice the weight difference, but the Canada Gazette states that a truck load of the new loonies will weigh 980 kilos less than the old version, and 286 kilos less for a truck full of toonies, thus “improving fuel efficiency of transportation and reducing the carbon footprint of delivering coins to the Canadian public.”
More than one billion loonies have been produced by the Royal Canadian Mint since the coin was introduced in 1987, while some 700 million toonies have been minted since 1996.
The mint produces about 30 million of each coin annually, and the government says the elimination of the nickel element will reduce nickel demand by about 539 metric tonnes a year — just a tiny fraction of Canada’s domestic output.
The current loonie is made from bronze-plated nickel, while the toonie has a ring of pure nickel around a copper alloy centre. The new coins will use the same multi-ply plated steel technology used in the penny, nickel, dime and quarter.
The change comes as nickel prices have fluctuated by as much as 1,000 per cent in recent years, according to the government, creating both supply and cost issues.
DENVER — The Denver Mint will limit production of the presidential dollar coins starting in 2012. the White House said Tuesday it is stopping nearly all production of the coins, which carry the likeness of every deceased president. the effort will save taxpayers $50 million a year in production and storage costs. in 2005, Congress passed the Presidential $1 Coin Act, which mandated that the United States Mint issue four new coins each year from 2007 to 2016. but as it turns out, there just wasn’t much demand. “Surprising, to my shock and dismay,” Vice President Joe Biden said jokingly Tuesday as he announced plans to stop production. the United States Mint had been producing between 70 and 80 million coins per deceased president. but the lack of demand has resulted in nearly 1.4 billion coins — or 40 percent of those produced — being returned to the Federal Reserve. Treasury Secretary Timothy Geithner said simply: “That costs money.” the White House says the coin surplus will more than meet the demand for the coins for at least a decade.the Mint will still be required by law to produce a small number of coins for collectors. the announcement is part of a White House campaign to cut back on government waste. the White House also announced efforts Tuesday to reduce Medicare fraud involving prescriptions for OxyContin and Percocet, and outlined steps the Justice Department took to recover $5.6 billion in fraud this year.
WASHINGTON — the federal government has too much money on its hands.
That may be surprising, especially given that the government is flat broke, with a $15 trillion national debt.
But it’s also awash in shiny one-dollar coins, with more than a billion of them going unused by the public and piling up in bank vaults across the country.
To deal with the excess, the Obama administration announced Tuesday that it would all but halt production of its special presidential dollar coins for general circulation.
The decision came after the Federal Reserve told Congress earlier this year that it wanted to spend $650,000 to build a storage facility at its bank in Dallas to store all of the surplus coins in one place. And it planned to spend another $3 million to transport the surplus coins to the new warehouse.
Administration officials said the move would save the government $50 million annually for the next several years.
“we simply shouldn’t be wasting taxpayer money on money that taxpayers aren’t using,” said Treasury Secretary Timothy Geithner.
Members of Congress were trying to intervene, with Rep. Adam Smith, D-Tacoma, introducing a bill that would have forced the U.S. Mint to reduce production. Smith said he was pleased that the president and his administration “have seen the waste in this program” and reacted to it.
“we don’t use dollar coins,” Smith said. “It’s funny – you go to Europe, and you’ve got the euro and you’ve got the pound, but in America, people just don’t walk around carrying coins the way they do in Europe. It’s a cultural thing.”
The beginning of the surplus dates back to 2005, when President George W. Bush signed the Presidential $1 Coin Act, which required the U.S. Mint to issue new coins to honor deceased presidents each year, regardless of demand. the government tried to force circulation of the coins by requiring their use by federal agencies and the U.S. Postal Service.
Despite the efforts, nearly 1.4 billion excess dollar coins sat untouched in vaults, enough to meet expected demand for more than 10 years. And the Mint planned to produce another 1.6 billion dollar coins in the next five years.
The plan to stop production was made by Vice President Joe Biden as part of the administration’s “Campaign to cut Waste.” Biden said the Mint was only halfway through its production cycle, still making coins to honor presidents from the 1800s.
“And as it will shock you all, the call for Chester a. Arthur coins is not there,” Biden told members of the Cabinet.
At first, Smith said, Congress’ mandate was a moneymaker for the federal government.
“It costs like 30 cents to make a dollar coin, so you make 70 cents on the deal,” Smith said. “the problem is we were generating so much more than there was demand for. If you’ve spent 30 cents and don’t sell it, all you’ve done is spend 30 cents, first of all. second of all, you’ve got to store the darned things somewhere. We’re trying to save money here.”
In its annual report to Congress this year, the Federal Reserve said it had ample space to store more than $2 billion in dollar coins by 2016, when the government planned to stop producing the presidential coins.
But since it needed more space for its inventory, the Fed said it needed a new warehouse in Dallas, even though there would be “no perceptible benefit to the taxpayer.”
The Fed’s report prompted a spate of bills on Capitol Hill.
Smith proposed a bill that would require the Fed to roughly cut its production of coins in half. His bill would not have stipulated exactly how many coins would be produced each year, but the number would have been linked to the demand for the coins in the previous year.
The administration said it still would be required by law to produce “a relatively small number of the coins to be sold to collectors,” but not the 70 million to 80 million coins mandated to honor each president.
Officials said they expect the excess inventory to be drawn down over time.
While the government will stop producing most of the coins, it won’t stop the debate over whether U.S. citizens should stop using the one-dollar bill.
A report by the Government Accountability Office in March of this year found that replacing the one-dollar bill with the one-dollar coin would save the government about $5.5 billion over 30 years.
That’s mainly because the coins are so much more durable than bills. but polls have consistently found that Americans favor the dollar bill.
Rob Hotakainen: 202-383-0009 email@example.com
Press Release: COINS Act Calls for $1 Coin Transition to Reduce Government Waste « Dollar Coin Alliance
Rep. David Schweikert Calls for Elimination of $1 bill to Save Taxpayers Billions
Washington, DC (September 20, 2011) House Financial Services Committee member Congressman David Schweikert (R-AZ) today introduced a bill to modernize the nation’s currency by eliminating the wasteful, inefficient $1 note. the Currency Optimization, Innovation and National Savings (COINS) Act calls for a transition to the more economical and environmentally friendly dollar coin, a change that the U.S. Government Accountability Office (GAO) has been advocating for more than two decades to help reduce government waste. Congressman Schweikert is joined in his effort by original co-sponsors, Super Committee member Rep. Jeb Hensarling and Rep. Blaine Luetkemeyer.
According to a report released in March by the GAO, hundreds of millions of taxpayer dollars are wasted each year by the continued use of the dollar note. the report, “Replacing the $1 Note with a $1 Coin would Provide a Financial Benefit to the Government,” found that the transition would save the government an average of $184 million per year and approximately $5.5 billion over a 30 year period. using more traditional assumptions in their analysis, savings could be as high as $11.1 billion. This was the fifth report the GAO has issued on the benefits of transitioning to the dollar coin, dating back to 1990. Estimates of annual cost savings in previous reports have been as high as $522 million.
“During a time when bipartisan debt reduction measures are in short supply, this is a piece of legislation we hope everyone in the Congress can get behind,” said former Congressman Jim Kolbe, honorary chairman of the Dollar Coin Alliance. “Americans are demanding that we find common sense solutions to begin bringing down our long-term debt – here’s a simple way to do just that without raising a single tax or cutting a single program.”
The COINS Act would require Federal Reserve Banks to stop issuing the $1 note four years after enactment of the legislation or when circulation of $1 coins exceeds 600 million annually – whichever comes first. This measure is necessary based on the experience of every country that has successfully transitioned to a low denomination coin. as the GAO reported, eliminating the dollar note was “essential to the success of [the] transition” to dollar coins in other countries. A January 2011 poll conducted by the Tarrance Group and Hart Research found that Americans favor the transition to a dollar coin by a two-to-one margin once the potential government savings are explained.
“Many Americans want to know how they personally can help contribute to deficit reduction – this is one simple thing we can all do to chip in,” added former Congressman Kolbe. “It just makes no sense to continue producing a low denomination paper bill when we have an alternative that would save the nation billions of dollars, especially in the current economic climate.”
While dollar bills last only a few years, according to the GAO’s latest estimate, a $1 coin can remain in circulation for more than 30 years. This means a single dollar coin can replace up to 17 dollar notes during its lifetime. Additionally, while billions of dollar notes are shredded and sent to landfills each year, $1 coins are 100 percent recyclable – meaning that even after coins are pulled from circulation, they can be melted down and forged into new coins. the private sector also stands to benefit from a dollar coin transition. Jammed dollar bills in vending machines cost the industry hundreds of millions in annual repair costs and lost sales. Evidence from the transit industry indicates that it is six times less expensive for businesses with high levels of cash transactions to process $1 coins versus $1 bills.
The Dollar Coin Alliance is a coalition of American small businesses, budget watchdogs, trade associations and private companies with a singular focus of moving the United States toward an economical, environmentally friendly dollar coin. Members include Citizens Against Government Waste, the International Association of Machinists, Southeastern Pennsylvania Transportation Authority, Tri-State Automatic Merchandising Council and United Steelworkers.
For more information, or to get involved, please visit www.DollarCoinAlliance.org.
What our members are saying about the dollar coin:
Tom Buffenbarger, President of the International Association of Machinists
“With all the talk in Washington of draconian budget cuts and austerity measures, switching to the dollar coin makes sense. it reduces the deficit without cutting any programs that hurt working people or raising the tax burden on the middle class.”
Tom Schatz, President of Citizens Against Government Waste
“We are literally throwing our money away… the reality is dollar bills last about three years while coins last thirty or more. This small ‘change’ will save the United States billions.”
Alfred Outlaw, Director of Revenue Operations, Southeastern Pennsylvania Transit Authority
“It is six times more expensive for us to process dollar bills vs. dollar coins. not to mention they are far less likely to jam our fare machines — saving SEPTA commuters’ time and hassle.”
Tony Buckholz, President of the Tri-State Automatic Merchandising Council
“Every time a bill jams up one of our vending machines that is one more dollar down the drain. the dollar coin is good for the taxpayer and good for small business owners like myself. we all win.”
William Dewald, former Senior Vice President, Federal Reserve Board of St. Louis
“Today’s dollar has the purchasing power of a 1950s dime. the United States prides itself in having a dynamic, market-oriented economy. Yet we are completely backward in not having kept our coinage in line with the purchasing power of the dollar.”