THE COST OF recapitalising Ireland’s banks has been underlined by the latest Exchequer returns – which showed that the Irish public finances would be €2bn better off than they were last year if not for the cost of repairing the banking sector.

Figures published by the Department of Finance this afternoon showed that the Exchequer ran up a €18.9bn deficit in the first seven months of the year, compared to a €10.2bn deficit for the same period in 2010.

The increase in the deficit was due to a massive €10.6bn bill run up by the taxpayer in bailout out the banking sector – with over €7.5bn paid out to recapitalise the banks in accordance with the last batch of stress tests, and another €3.1bn in payments of promissory notes to Anglo, Irish Nationwide and EBS.

The figures also showed that the government had spent over €3bn servicing Ireland’s national debt – that is, paying the interest on the country’s borrowings – so far this year.

Tax revenues for the year to date are 1.4 per cent ahead of target, thanks to higher income tax receipts and the introduction of the Universal Social Charge, though VAT receipts are €190m lower than expected and are down slightly on last year.

Three of the so-called ‘big four’ methods of raising taxes – income tax, excise duties and corporation tax – are all ahead of schedule, however, with income tax bringing in an extra €180m, corporation tax €93m, and excise duties €67m.

All in all, the Exchequer has taken in €18.633bn for the seven months to the end of July.

The State’s total expenditure is up by 0.9 per cent on the same period last year, to €25.7bn, with current spending up by 3.5 per cent but with capital expenditure down by over 26 per cent.

Department of Social Protection spending was lower than expected as a result of unexpectedly high PRSI receipts, while Education and Skills spent €116m less than anticipated, and Agriculture, Fisheries & Food spent €95m less than expected.