The 2016 Taxpayers Rights Protection Act should have solved the problems of unfair tax enforcement. It did not succeed completely, as the Tai Ji Men case continues to show.

by Wu Ching-Chin*

* A paper presented at the Webinar “Tax Justice as Social Justice: The Tai Ji Men Protest in Taiwan,” February 20, 2020

An article already published in Bitter Winter on March 3rd, 2021.

Tai Ji Men protests in Taiwan for taxpayers rights.
Tai Ji Men protests in Taiwan.

Although Taiwan’s tax law seems to have improved in form after the enactment of the Taxpayer Rights Protection Act in 2016, in fact, there is still much room for improvement in the actual protection of people’s rights.

First of all, when the National Tax Bureau issues a bill to a taxpayer, stating that the taxpayer needs to pay back taxes, whether the taxpayer is an individual or a business, normally the tax bill will not explain why the taxpayer needs to pay the bill. The tax bureau just cites legal provisions and demands the taxpayer to pay the bill according to the provisions, but the facts or evidence involved to justify its issuance of such a bill are not mentioned at all.

When taxpayers get such a tax bill, if they think they have already paid what they should pay, they have to bear the burden of proof and prove that they have already paid what they are supposed to pay. This is not logical because when the tax bureau accuses the taxpayers of tax evasion, the tax bureau should be the one that provides the facts and evidence to justify its claim. However, in most cases in Taiwan, taxpayers have to prove that they have paid their taxes, which is very problematic.

According to the Taxpayer Rights Protection Act I mentioned earlier, if the tax bureau wants a taxpayer to pay back taxes, or if it wants to impose penalties on a taxpayer for tax evasion, it is the tax bureau that needs to bear the burden of proof. This is clearly stipulated in the Taxpayer Rights Protection Act, but to this day, our tax authorities fail to follow the provisions.

Another image of the protests.
Another image of the protests.

There is a classic example in this regard. That is the 25-year Tai Ji Men case, known as the “Tax Law 228 Incident.” Please note it has lasted for “25 years!” A tax case normally will last for about ten years. If the case is not resolved, then another cycle will begin, and it will take another ten years. The Tai Ji Men case has gone through several cycles, and it is still not resolved.

This may sound completely unbelievable. How could this still happen in Taiwan? However, that is what actually happened. Twenty-four years ago, the Tai Ji Men case started because a prosecutor abused his power to prosecute Tai Ji Men and even accused them of raising goblins.

It is hard to imagine that a prosecutor could write such nonsense in his indictment, and then of course, the criminal decision completely acquitted the defendants. It was originally thought that Tai Ji Men’s ordeal would be over. However, when the acquittal was confirmed in 2007, unexpectedly, Tai Ji Men was still tortured by an even more painful ordeal—the tax case, which has lasted for 25 years. And then last year, because our administrative court judge lacked professional tax knowledge, the case was not resolved.

In my opinion, the tax case is very simple. It is about a traditional custom of giving monetary gifts in the form of red envelopes to a master by his disciples to show their respect to the master. According to our tax law, the gifts were not taxable and did not have a tax problem. However, our administrative court recognized the red envelopes for five years as gifts, but treated the red envelopes for one year as taxable tuition of a cram school. 

This is very strange, as the underlying facts of gift giving were the same. Surprisingly, the same court issued opposite decisions for different years. It recognized the red envelopes for the other years as gifts but treated the red envelopes for one year (1992) as tuition of a cram school. It does not require professional legal knowledge to tell that this is problematic. Basically, it is not logical!

For the years I mentioned, Tai Ji Men won; however, this just sent the case back to square one because there are still some subcases pending in our administrative court, and the tax bureau still demands tax payments. The taxpayers are like being placed in a meat grinder.

Protesting the actions of the Administrative Enforcement Agency.
Protesting the actions of the Administrative Enforcement Agency.

It saddens me that last year the enforcement agency carried out the enforcement action on the tax bill for the one year (1992) based on the court’s final decision, ruling that the red envelopes in that year were tuition of a cram school. Earlier, I only mentioned the tax bureau’s involvement in the case. The Administrative Enforcement Agency got involved too, and it carried out the enforcement action in August 2020. However, the Administrative Enforcement Agency and the National Tax Bureau failed to offer an accurate calculation for the alleged tax amount.

Regarding the seizure of property, the government just seized all the property belonging to Tai Ji Men in Taiwan. This is outrageous. Even if the tax bureau claimed that the seizure was based on a court decision, the government could only seize property whose value is equivalent to the alleged tax amount. However, the government seized all the property belonging to Tai Ji Men. This is in violation of the principle of proportionality of the Constitution. That is outrageous!

Frankly speaking, the tax bill was based on a wrong fact, and that was a wrong enforcement action. The Enforcement Agency could have stopped the enforcement action. However, in reality, there were bonuses for tax officers for collecting taxes, and there were bonuses for the enforcement officers, too. The enforcement action was carried out in August 2020. Surprisingly, in early 2020, two branches of the enforcement agency were discussing how to split the bonus for handling the Tai Ji Men case. That is outrageous! What do the civil servants think of the people’s property rights? Do they treat the people’s property as something that enables them to make money?

This 25-year case, to a certain extent, serves as a magical mirror that reflects the problems in the legal and tax systems in Taiwan. Today, on this special occasion, it saddens me to talk about such a case. However, through this case, we allow the people of Taiwan and of the world to understand the problems of Taiwan’s legal and tax systems. We need to continue to work hard to reform Taiwan’s legal and tax systems for a brighter future.