UK: Tobacco in Plain Packets Rule May Cost the Taxpayer £5bn

Source from:  The Daily Mail and Mail on Sunday (uk)  04/02/2013

Taxpayers could face a  £5billion 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 independent Centre for Economics and Business Research think-tank.

Legal challenges under the Human Rights Act or European Union law could claim that requiring plain packets  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 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'.

The report was commissioned by tobacco giant Philip Morris. Its most startling revelation was the figure for possible compensation after what would be official 'confiscation' of the brand value in cigarettes, which the think-tank estimates at between £4 billion and £5 billion in the UK.

Falling sales values, as smokers switched to cheaper brands, would also be accompanied by a rise in volumes. Enditem