Feedback is being sought on whether low value coins should be removed from circulation and how this could lead to the introduction of a rounding system for all cash transactions.
A public consultation has launched today (Wednesday 10 May) which presents the case for withdrawing 1p, 2p and 5p coins, its potential impact and the necessary amendments which may need to be made to the Currency Act.
Views are being sought from the public, businesses, retailers and financial institutions to ensure the proposal is given broad and full consideration if it is taken forward.
Inflation has caused the purchasing power of 1p, 2p and 5p coins to diminish over time, leading to a fall in use exacerbated by precautions in place during the pandemic. People have tended to save coins as a result and they are then not actively circulated through the economy.
No Manx 1p and 2p coins have been minted since 2016 — the primary reason being that minting costs more than their face value.
The consultation explains how, should a decision be taken to remove the coins from circulation, the Treasury would propose to introduce compulsory rounding for all cash transactions. This process would only take place on a total bill, not on the cost of individual items making up that bill.
So how might this work? Where a total bill is being paid in cash, and the number of pence to be paid does not end in 0 or 10, the amount of the final bill would be rounded to the nearest 0p or 10p:
- £9.21, £9.22, £9.23 or £9.24 would round down to £9.20
- £9.25, £9.26, £9.27, £9.28 or £9.29 would round up to £9.30
It is important to stress that rounding would not apply to any card or digital transactions. Anyone who wanted to pay a total bill of £9.23, for example, via an online payment system or by debit, credit or store card, would still be charged £9.23.
Treasury Minister Dr Alex Allinson MHK said:
‘Any change to the way society uses cash must be carefully considered as its presence within our culture has been embedded over many centuries. There is, however, a need to properly examine how and why the use of coins has declined and what we should do to remove those deemed no longer useful.
‘The consultation process will enable the Treasury to gather views and feedback from all corners of our community, which will help inform possible next steps. While decisions are yet to be made, it is important to note the experience of many countries which have successfully navigated this process, including Australia, Belgium, Brazil, Canada and our neighbours in the Republic of Ireland.’
The consultation document is available to view on the Government website and may also be downloaded electronically from consult.gov.im.
Alternatively, written comments can be emailed to email@example.com or by post to Policy and Legislation Section, 1st Floor, Financial Governance Division, Treasury, Government Offices, Bucks Road, Douglas, IM1 3PU.
The process will run for seven weeks and conclude on Wednesday 28 June.