This is actually resolved by modifying the Tag module. See http://community.impresscms.org/modules/newbb/viewtopic.php?post_id=41871* forumpost41871

Open modules/tag/include/formtag.php and find the section labeled //itemid. Change it to this

// itemid
if( is_numeric($value) is_object($GLOBALS['xoopsModule']) ){
$modid = $GLOBALS['xoopsModule']->getVar('mid');
$tag_handler = xoops_getmodulehandler('tag', 'tag');
if($tags = $tag_handler->getByItem($value, $modid, $catid)) {
$value = htmlspecialchars(implode(', ', $tags));
} else {
$value = NULL;
}
}

Updating tickets (#77, #78, #79, #80, #81, #82, #83, #84, #139, #141, #142, #143, #144, #145, #146, #147, #148, #154, #140)