The Taiwan National Tax Bureau tried to invalidate the results of its own previous open survey through suggestive phone interviews and fax response forms
by Massimo Introvigne
Bitter Winter is publishing a series of articles about what may well be the most important recent tax case concerning a spiritual minority at a global scale. It is surely the longest, as it enters its 25th year, and this is reason enough for our magazine to keep exploring its multiple facets. Besides being a paradigmatic case of how spiritual minorities are persecuted through taxes as a tool, it is a fascinating case that reads like a legal thriller.
Since its establishment in 1966, Tai Ji Men has never had any tax issue, except for the years 1991–1996. In 1996, the Taiwan government initiated a religious crackdown for political reasons, which also involved Tai Ji Men, although it had not taken political sides. Based solely on false accusations, a prosecutor fabricated fake witness and evidence to prosecute Tai Ji Men. He also sent the case to the National Taxation Bureau, which imposed unjustified taxes on Tai Ji Men for the years 1991–1996.
As our readers know, the Tai Ji Men case revolves around a question that has been explored by courts internationally with respect to other religious and spiritual groups as well: is money given by disciples to their spiritual leaders or masters a taxable payment for services, or is it a tax-exempt gift? In the case of Tai Ji Men, which is a menpai (similar to a school) of Qigong and martial arts based on esoteric Taoism, dizi (disciples) give money to their shifu (masters) in red envelopes. They claim that these are gifts, as such tax-exempt. The prosecutor who started an investigation in 1996, prosecuted, and lost, a criminal case against the leader of Tai Ji Men and his co-defendants, who were found not guilty of tax evasion or any other charges by the Supreme Court, and Taiwan’s National Tax Bureau (NTB), insist they are tuition fees for what they call a “cram school,” i.e., a school where tuition is offered, normally for preparing exams.
Who is right? In Taiwan, the Criminal Division of the Supreme Court ruled that the content of the red envelopes consists of non-taxable gifts. The Supreme Administrative Court and the Taipei High Administrative Court maintained that the National Tax Bureau failed to investigate the nature of the red envelopes given by Tai Ji Men dizi to their shifu. Taiwan’s Ministry of Education, which has authority over cram schools, concluded that Tai Ji Men qigong academies are not cram schools.
Yet, the NTB was not persuaded, and carried out surveys to ascertain the opinion of the dizi. In 2002, the NTB conducted a first survey, asking a sample of dizi whether they regarded the money in the red envelopes as tuition fees or gifts. All the 206 dizi who responded indicated that they considered their red envelopes as gifts. However, the NTB of Taipei declared that only nine respondents had indicated that theirs were gifts while the NTB of the Central Area declared that only five did so. The statements were false, but the NTB refused to release the answers to the survey, creating widespread protest among Taiwan’s legislators.
The NTB faced mounting criticism and an investigation report was issued by the Control Yuan, indicating that the NTB was guilty of seven violations of law in the Tai Ji Men case, including failure to verify the nature of the income involved. The NTB also admitted its wrongdoings. In order to thoroughly resolve the Tai Ji Men tax case, the Executive Yuan held an inter-ministerial meeting on December 9, 2011, in which it was resolved that the NTB should carry out a new open survey, and the investigation results would determine whether to tax Tai Ji Men or not. The investigation started on December 16, 2011, and results were disclosed in February 2012, revealing that there had been 7,401 respondents, and all had answered that they regarded the content of the red envelopes as gifts, which proved that the content of the red envelopes was tax-exempt income.
This should have settled the matter, but didn’t. On May 12, 2016, some 100 Tai Ji Men dizi, some of them more than 80-year-old, received phone calls from people claiming to call on behalf of the NTB. They were asked whether they had given money to their shifu in 1996, and if yes, if they had considered this money at that time as a gift or a tuition fee. Elderly dizi were asked to recall, during the short span of a phone call, facts of twenty years before.
Some reported that they didn’t know how the callers got their phone numbers and personal information, and that the callers refused to disclose their titles, names and telephone numbers, so they were not sure if the callers were really from the NTB, suspected a telephone fraud, and hung up.
Ms. Yan Chin-ying answered she could not recall what happened twenty years before. But the phone call scared her. Other elderly dizi reported that they were so scared by the phone calls that they suffered excessive heartbeats, headache, and nausea, and had to call their doctors.
Those who answered the phone calls also received “fax response forms,” where they could indicate whether what they had given to the shifu in 1996 was (a) a tuition fee, or (b) part monetary gift and part tuition fee. The option that it was all a gift from dizi to shifu was not provided.
I am personally a sociologist who during the last forty years has conducted several hundred surveys in various fields. The first commandment for those who design a survey is that questions should not be suggestive, i.e., designed to suggest a certain answer. When the choice is offered among several pre-determined answers, they should include all possibilities, not those agreeable to the interviewer only. A survey based on suggestive questions is both worthless and a serious breach of the ethical principles governing the field.
This commandment was obviously violated by the NTB by allowing those who received the “fax response forms” to indicate only that the payments were totally or partially tuition fees. It was impossible for the respondents to indicate that they were simply, and totally, gifts. Not including this answer is indicative of bad faith on the part of the NTB, because it was the answer it had received from 7,401 respondents in 2012. Dizi reported that the telephone survey was also conducted in a suggestive manner, with the callers trying to induce the respondents to admit that their payments were tuition fees. Moreover, when dizi answered directly over the phone that all the money given was a gift, the callers said that there was no need for them to fax their replies back to the callers…
Six days after the so-called survey, the legislator Huang Ko-chang called a press conference to denounce the illegal activities of the NTB. The Deputy Director-General of the Taxation Administration Wang Hsiu-Chung and the Deputy Director-General of Taipei’s NTB Wang Chie-Chen attended the press conference, and objected to Huang that the survey had been properly “internally analyzed.” They ended up admitting that they had conducted the ambush survey because they were not happy with the 2012 open survey. They said that the 2012 survey “did not yield any result.” This was false, as the 2012 open survey had produced noticeably clear results. Only, they were results that contradicted the NTB’s dogmatic theory.
In the end, the NTB admitted at the press conference that the investigation procedure for the 2016 ambush survey was flawed, and it never used elements taken from the survey before any court of law.
The administrative courts ruled several times in favor of Tai Ji Men. In 2018, the Supreme Administrative Court again made a judgment in favor of Tai Ji Men, confirming that Tai Ji Men is a menpai (similar to a school) of qigong, martial arts, and self-cultivation. It is evident that the state authorities have recognized the nature of the traditional shifu–dizi relationship as well as the nature of the red envelopes as gifts for the shifu in the context of a menpai. The gifts were actually tax-free, and were not tuition fees of the so-called cram school.
However, the 2016 ambush survey incident is indicative of the stubborn determination of the NTB to rely on its own ideological prejudices rather than on the facts. When the facts contradicted the prejudice, the NTB tried to produce fake facts. It will continue to do so after 2016, insisting on its administrative persecution of Tai Ji Men even after having lost the relevant court cases.
This case also suggests that Taiwan’s NTB was not above breaking the law, ignoring the courts’ opinions, and even designing flawed investigation methods to induce favorable evidence to itself. This obviously constituted a forgery of evidence, in which the NTB overstepped its authority and the law to an unbelievable extent.