The Revenue Commissioners admitted today that €306 million had been repaid to PAYE workers in 2003, but said this was due to unavoidable circumstances.
"The vast majority of the refunds were based on claims people made for health expenses. They can add up to a substantial amount of money but we don't know what people's expenses will be until the end of the year," said a spokesman.
He added that the PAYE system collected the correct amount of tax in the vast majority of cases and warned taxpayers not to expect a "refund bonanza".
Around 17 per cent of the 1.65 million PAYE taxpayers applied to the Revenue for refunds.
In response to a Dáil question by Fine Gael TD Mr Phil Hogan, the Revenue said 75 per cent of taxpayers who applied for a refund received it.
The average repayment was €141.
PAYE taxpayers are entitled to claim a tax refund for doctor's fees, medicines, dental costs, psychotherapy, speech therapy for children and other health expenses.
No relief is provided for the first €125 of expenses.
The Revenue spokesman said every effort was made to alert taxpayers to the tax reliefs for health expenses.
"We include leaflets when we send letters to PAYE taxpayers, we have it on our website and we place newspaper advertisements. We spend a lot of time trying to make people aware," he said.