The new minimum wage rate of €7.65, which comes into effect today, could bring thousands of low paid workers back into the tax net according to the Labour Party.
Labour spokeswoman on Finance, Joan Burton, welcomed the increase but called on the Government to honour their commitment to take all on the mimimum wage out of the tax net.
"The failure of the Minister for Finance, Brian Cowen, to sufficiently increase exemption limits in the December budget means that more than 37,000 low paid workers will be brought back into the tax net and find themselves paying tax once again," Ms Burton said.
"The net result of this will be that many low paid workers will find that the welcome increase of 65 cent per hour in the minimum wage will be eaten into by the tax deductions they will now face. It seems that the government gives with one hand, and takes away with the other," she added.