Taiwan and the Two Covenants: A Shadow Report. 5. Appendix: Brief Introduction to the Tai Ji Men Tax Case

“Bitter Winter” readers are familiar with the case. It is relevant for the Shadow Report, too.

by Bitter Winter

Article 5 of 5. Read article 1, article 2, article 3, and article 4.

Preface

Since 1996, the Tai Ji Men case has been one of the longest-standing examples of taxpayer human rights violations. In 2005, the Control Yuan’s Third Human Rights Protection Summary Report identified this case as a serious violation of human rights. In 2011, the Chinese Association for Human Rights, Taiwan’s first civil society organization dedicated to human rights, released a beige book on taxpayers’ human rights in Taiwan, highlighting the Tai Ji Men case as a landmark example of tax injustice. In 2013, when the international review committee conducted its first examination of Taiwan’s implementation of the ICCPR and ICESCR, it also noted this case and inquired about the government’s response. Yet, to this day, the case remains unresolved. It is referred to as the “228 Incident (White Terror) in Taiwan’s Taxation” and the “Revelation of the Dark Side of Taiwan’s Legal and Tax Systems” by scholars and experts, as it exposes serious issues within Taiwan’s legal and tax frameworks and has become a typical case for studying tax injustice in Taiwan. Below is the case summary.

Brief Introduction to the Case

Tai Ji Men is a menpai (similar to a school) of qigong, martial arts, and self-cultivation embodying Taoism’s wisdom. Its leader, Dr. Hong Tao-Tze, Zhang-men-ren (Grand Master) of Tai Ji Men, founded the Tai Ji Men Qigong Academy in Taiwan in 1966. It follows an ancient Chinese tradition practiced by many similar organizations, where a master-disciple relationship is respected, and the master guides disciples in cultivating themselves.

Dr. Hong founded the Tai Ji Men Qigong Academy in 1966. Since founding Tai Ji Men, Dr. Hong was taxed only during the six years mentioned in Prosecutor Hou Kuan-jen’s indictment, when Tai Ji Men was caught in the government’s religious crackdown. It is a traditional custom for disciples (dizi) to give a red envelope with money to their Shifu (master) as a sign of respect and gratitude. No master of any martial arts school in Taiwan was taxed for accepting red envelopes from their disciples. The Chinese Martial Arts Association and other similar groups have issued written statements confirming this, and none of the tens of thousands of organizers of self-cultivation or religious groups were taxed for accepting monetary gifts from their followers.

The Tai Ji Men tax case stemmed from the prosecution of a criminal case involving a crackdown on religion. The NTB did not investigate the matter according to its duty and authority, nor did it wait for the criminal case judgment to establish the facts. Shortly after the indictment was issued, it sent a tax bill based on the indictment. It considered the monetary gifts in the red envelopes that Tai Ji Men dizi gave to their Shifu, according to tradition, as tuition fees for a cram school. It imposed comprehensive income and business taxes on the Shifu from 1991 to 1996.

In 2007, the Supreme Court (Criminal Division) found the defendants in the Tai Ji Men case not guilty, ruling that there was no tax evasion or violation of tax laws. The court stated that the red envelopes were gifts and thus tax-exempt. It also explained that some Tai Ji Men dizi ordering uniforms and other items on behalf of others was considered volunteer work, not for profit, and not taxable. In 2018, the Supreme Administrative Court ruled that Tai Ji Men is a menpai of qigong, martial arts, and self-cultivation, not a cram school. This indicates that the facts that Tai Ji Men is a menpai and that the red envelopes for the Shifu are gifts have been recognized by Taiwan’s highest courts.

Based on court decisions, the NTB should revoke the tax bills according to the law and restore people’s rights to a stable, interference-free spiritual life. However, the NTB has not corrected its mistakes and has seized Dr. Hong’s assets, whose value is several times higher than the alleged back tax. To defend its innocence, Tai Ji Men has been working to seek remedies within Taiwan’s complex administrative and judicial tax relief system over the past 24 years.

Tai Ji Men had won over ten cases over tax bills for 1991, 1993, 1994, 1995, and 1996, leading the NTB to finally correct the taxes for red envelopes in those five years to zero in 2019. For 1992, because the NTB concealed evidence—documents showing that Tai Ji Men dizi attested that their red envelopes for their Shifu were gifts—the administrative court judges did not wait for the Supreme Court’s decision (which finally ruled in favor of Tai Ji Men in 2007). They issued a wrongful final judgment in 2006. Since Tai Ji Men’s nature has remained consistent over the years, according to legal principles and logic, the NTB should have corrected the 1992 tax bills to zero like the other years and entirely terminated the case. However, despite the apparent inconsistency between the tax treatments for 1992 and those of the different years, the NTB still insisted on executing the compulsory enforcement order. Tai Ji Men Shifu’s property was auctioned in August 2020.

The fact that Tai Ji Men is a menpai of qigong, martial arts, and self-cultivation, and that the red envelopes for the Shifu were gifts, has remained consistent over the years. However, over the past 24 years, Tai Ji Men Shifu and dizi have devoted enormous energy, money, and effort to seeking remedies for this fabricated tax case involving tax agencies, the petition committee, administrative courts, and various government agencies. The following facts all demonstrate that Tai Ji Men is innocent.

• In 2007, the Supreme Court (Criminal Division) ruled that the red envelopes for the Shifu were gifts.
• In 2009, all the detained defendants received national compensation from the government for wrongful imprisonment.
• In 2002, the Control Yuan outlined eight major legal violations by the prosecutor handling the Tai Ji Men case and identified it as a significant human rights violation. That year, the Control Yuan launched independent investigations into the case and issued an investigation report attached to Letter No. 0912600349 (Year 2002 Yuan-Tai-Si- Tzu). The report stated that Prosecutor Hou Kuan-jen committed eight major legal violations, including breaching the principle of secret investigation, conducting illegal searches, unlawfully freezing assets, overstepping his authority to order local governments to disband Tai Ji Men, severely violating the rights of the defendants, and damaging the public prosecutor’s reputation as a fair law enforcement official. He violated relevant regulations of the Criminal Procedure Act, and the case was forwarded to the Ministry of Justice for disciplinary action against him. During the investigation, Prosecutor Hou admitted that he did not thoroughly investigate the Tai Ji Men case. The Control Yuan noted that since the indictment conflicted with the evidence, it was against the principles of evidence to pursue public prosecution against the defendants. Legally, the prosecutor should not have filed the public prosecution, and the indictment should not have been used as evidence to impose taxes. As a result, the tax bills based on the indictment have been invalid from the start.
• In 2009, the Control Yuan confirmed seven major legal violations by the NTB. That same year, they investigated the handling of the NTB’s Tai Ji Men tax case. They found that the NTB committed seven key violations of law, including (1) failing to investigate and verify the individual comprehensive income tax as required, (2) neglecting to clarify the nature of the income involved in the case according to its authority, with apparent negligence on the part of the taxation bureau, (3) based on the survey results about the income’s nature, the list prepared by the NTB in Taipei City was hasty, and it failed to consider both the facts that favored and those unfavorable to the taxpayers, which needed urgent review and correction. A member of the Control Yuan, Chien Lin Hui-chun, who led this investigation, stated at the press conference for the “10th Anniversary of the Redress of the Tai Ji Men Case of Injustice” that the Control Yuan identified seven legal violations by the NTB. When she listed each one, the NTB responded, “Ah, we did make a mistake!” In 2011, she told the finance minister, “The case (Tai Ji Men case) should be closed.”
• In 2011, all the 7401 survey forms collected in response to the taxation bureau’s open survey indicated that the red envelopes were gifts.
• In 2012 and 2013, the NTB officially acknowledged that Tai Ji Men is not a cram school.
• In 2018, the Supreme Administrative Court ruled that Tai Ji Men is a menpai of qigong, martial arts, and self-cultivation and stated that the final court decision regarding Zhang-men-ren’s comprehensive income taxes for 1992 was incorrect.
• In 2019, the NTB adjusted their tax claims against Tai Ji Men for the red envelopes for 1991, 1993, 1994, 1995, and 1996 to zero.

• Over the past 24 years, Tai Ji Men Shifu and dizi have submitted over a thousand petitions and sent more than 20,000 petition letters to the Office of the President and the five Yuans (branches of government). More than 300 legislators received Tai Ji Men’s petitions, questioned finance and tax officials about the case, held public hearings, jointly signed petitions, coordinated efforts to resolve the case, and asked the NTB to revoke the unlawful tax bills. All the objective evidence, decisions, and assertions from various government agencies support the idea that Tai Ji Men has not owed any tax on the red envelopes from the beginning. However, the NTB continued issuing unjustified tax bills to Tai Ji Men and auctioned off the Shifu’s property, ignoring all decisions, assertions from other government agencies, and other objective evidence.

The Tai Ji Men case clearly shows that the NTB’s unequal treatment violates both Covenants’ core principles of equality and non-discrimination. Under the guise of cracking down on illegal religious activities, the NTB has long used tax measures to suppress people and infringe on their rights to freedom of belief, religion, and cultural rights guaranteed by the Covenants. Moreover, the government allows the NTB to exceed its authority by ignoring decisions and assertions from other government agencies. When faced with a mandatory enforcement order from the NTB, individuals cannot seek help from government agencies. The leniency of government agencies toward the NTB’s misconduct infringes on people’s property rights. It profoundly breaches the Covenants, which obligate government agencies to make every effort to offer effective remedies for people’s rights.

In the Tai Ji Men case, the government has violated many provisions of the Two Covenants and Article 1 of the Universal Declaration of Human Rights: “All human beings are born free and equal in dignity and rights,” and Article 30: “Nothing in this Declaration may be interpreted as implying for any State, group or person any right to engage in any activity or to perform any act aimed at the destruction of any of the rights and freedoms set forth herein.”