More than 113,000 low-income workers would be better off if the Government offered cash for unused tax credits, campaigners have said.
Research from Social Justice Ireland claimed refunds to people on smaller pay packets would drive employment by widening the gap between wages and welfare rates.
The Building a Fairer Tax System report said the cost to the state of its proposals would be €140m - less than 5pc of previous Department of Finance estimates.
Social Justice Ireland's director, Fr Sean Healy, said making tax credits refundable - paying money to workers whose income is not enough to use up their tax allowance - could improve the living standards of up to 240,000 people when children and other household members were taken into account.
"One in every three households at risk of poverty is headed by a person with a job," he added. "Our proposal would make Ireland's tax system fairer, address part of the working poor problem and improve the living standards of a substantial number of people in Ireland."
Fr Healy insisted the refund plan was straightforward and cost-effective. "The costings supplied by the Department of Finance were wrong by more than 95pc so the proposal has been very badly served by poor evidence from a source on whom we should be able to rely," he said.
The report launch in Dublin was also attended by Green Party finance spokesman Senator Dan Boyle, who called on Minister for Finance Brian Lenihan to give the proposals full consideration. "The introduction of refundable tax credits has been a long-standing Green Party policy," Senator Boyle said. "In a budget where many further difficult decisions have to be made, advances must also be progressed in protecting the poor in society."
Under the proposals, only unused personal and PAYE tax credits would be refunded. Individuals must not have earned an annual total income greater than €15,600, while married couples would not have earned a combined yearly income of more than €31,200.
The study claims the majority of the refunds would be valued at less than €2,400 per year, or €46 a week.
It was compiled by economics experts from Trinity College using income data from almost 5,400 households.