Penny pinch – Canada to phase out the copper coin

This budget is going to cost Canadians a pretty penny.

Search the couch cushions, roll all those lucky pennies and take them to the bank, because the government has announced it will phase out the copper coins beginning this fall.

The decision, announced in Thursday’s federal budget, came down to dollars and cents.

Due to inflation, “the penny’s burden to the economy has grown relative to its value as a means of payment,” according to budget documents.

“The penny is a currency without any currency,” said Finance Minister Jim Flaherty. “Free your pennies from their prisons at home and donate them to charity.”

Flaherty said it costs 1.5 cents to manufacture each penny.

In line with a 2010 Senate report, the government will stop making pennies this fall and ask Canadian businesses and consumers to simply round up (or down) to the nearest five cents at
the cash register.

However, if you’re using plastic, you’ll still pay down to the nearest cent.

The government expects the initiative will save precious tax dollars, because Canadians currently lose money on every new penny produced by the Royal Canadian Mint – to the tune of
$11 million per year.

Canada isn’t the first country to pinch its pennies.

Australia removed its one and two-cent coins from circulation in 1992, the United Kingdom pitched the half-penny in 1984, and after getting rid of its one-agora coin in 1991, Israel’s five-agorot coin
followed suit in 2008.

The government said it will partner with charity organizations that want to capitalize on a countrywide emptying of piggybacks. According to a 2006 Desjardins Group study, “Canadians could be hoarding several billion pennies, along with other coins.”