While the Magnate is a Regent, Regents other than the Magnate cannot tax Empire-controlled cities (even Loyal ones) unless they have the matching Monopoly.
If the Magnate becomes an Outlaw, flip this to Open Economy.
Act: 3
A: No. A Regent Lord is bound by the Truce law when taxing a Regent Vassal city under Imperial control, and bound by Closed Economy when taxing an Outlaw Vassal city under Imperial control. An Outlaw Lord can always tax Vassal cities regardless of Empire control.