Plain packaging a £5 billion gorilla for UK taxpayer?

U.K. taxpayers could face a £5 billion ($7.67 billion) bill if ministers insist cigarettes are sold in plain packages.

The money would be awarded by courts to tobacco companies in recognition of the fact that the government had destroyed their brand equity, according to the Centre for Economics and Business Research, as reported on the This is Money website.

Legal challenges under the Human Rights Act or EU law could claim that requiring plain packages meant the industry had been unfairly deprived of its trademark rights, says a report by the think-tank.

The Australian government, which has introduced plain packaging, is being sued by companies for the loss of their brands.

The think-tank’s chief executive, Douglas McWilliams, said the use of plain packaging would lead to cheaper cigarettes as smokers became less aware of costlier brands and new entrants were spared the expense of marketing.

This would mean less money for the treasury with “a reduction in tobacco’s aggregate annual contribution to the Exchequer of between £219 million and £348 million.”