Yikes. Not sure if you built that template yourself or purchased it. It looks similar to a purchased template of a particular vendor ... and they tend to supply a full set of PHP files with their template due to their pervasive and non-zen-like modifying of numerous code files to force their desired look and feel. Often they break other things in the process.
I'd start by putting up a fresh install of Zen Cart... in your case, v1.2.6. Then go through all the admin settings one by one and make them the same as your current site's admin settings ... while testing the cart for tax-calculation accuracy all the way along. (So start with the tax-settings first and make sure they work right.) Then once all the settings are the same and still working right, start replacing PHP files from custom site to fresh site, and test until it breaks ... then you'll know which file is causing the problem. Then you'll have to determine the best approach to fix it.
Or you could just ask the folks who provided the template to fix it ... You might want to do a fresh install of just their code first to be sure it's not something you did after installing their files.
Sorry ... not an easy thing to diagnose...
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