Harper government scraps penny

The Harper government has decided that the penny no longer makes financial sense.

The 2012-2013 federal budget tabled March 29 includes a plan to phase out the copper one-cent coin.

The Conservatives’ Economic Action Plan describes the penny as a “burden to the economy.” This is because every penny costs 1.6 cents to produce, which adds up to a total cost of about $11 million per year.

Consumers can still use pennies for an indefinite period of time; however, as the coins disappear all prices will be rounded to the nearest five-cent increment.  
The final price of a purchase will be rounded after GST or HST are calculated.

For consumers who are using debit or credit cards instead of cash, all purchases will still be priced to the individual cent.

Canadians can exchange their pennies at participating financial institutions. The government is encouraging people to donate pennies to charity. 
Canada is not the first country to say goodbye to its one-cent coin. It is following the lead of other places like Australia, Norway, Switzerland and the United Kingdom.

Studies have shown that removing the coin has not caused inflation in other countries.

The Royal Canadian Mint will stop producing new pennies in fall of 2012.