BRITAIN'S TAX CUT MAY CREATE NEED FOR MORE COINS
Dick Johnson submitted these thoughts on A potential shortage of coins due to hoarding which may force the Bank of England to put more coins into circulation. -Editor
While other countries are considering abolishing their lowest denominatin coins, Great Britain is fearful they don't have enough. A tax cut in the VAT (sales tax) initiated in November may result in greater demand for one and two-pence coins.
Previously the 17.5 percent tax was often built in retail prices. Now the price is lowered with only a 15 percent tax. For example a £4.99 item, which would previously have called for just one penny in change from a £5 note, will now cost £4.88, increasing the demand for change.
All of this means that much more small change is needed when customers pay in cash. The Royal Mint is on alert for an increase in demand. 'We have been looking into this,' said a Royal Mint spokesman. 'We are monitoring the position closely. There is no sign as yet, but it may be a bit early for demand to have fed through the system.'
A recent article reveals the following data on coins currently in circulation in the UK:
• There are coins worth about £3.6 billion in circulation, of which £2, £1 and 50p pieces account for £2.5 billion, or 70 per cent.
• Smaller silver coins-20p, 10p and 5p - account for £815 million, or 23 per cent.
• Copper coins – 2p and 1p – account for £241 million, or seven per cent.
Interestingly, Coinstar operates in Great Britain as well as North America. Coinstar machines in the UK have processed more than £500 million in change, in approximately 22 million transactions. More than two billion coins have passed through the machines.
Here is the article for more information: Coin shortage crisis looms after Darling's VAT cut (http://www.dailymail.co.uk/money/article-1111554/
Wayne Homren, Editor
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