Use of tag.slug instead of tag.title in a custom route
You do not have to change your route. Instead modify your template where you are linking the tag.

Instead of using

&lt;a href="{{ siteUrl }}tags/{{ tag.title | url_encode }}"&gt;{{ tag.title }}, &lt;/a&gt;


Use

&lt;a href="{{ siteUrl }}tags/{{ tag.slug }}"&gt;{{ tag.title }}, &lt;/a&gt;


UPDATED

To clarify the above snippet goes in the template that generates the link to take the the user to your _tag.html template, not in the _tag.html template itself.

Your route should be as below:



UPDATE 2

Above snippet updated to match your example above.

UPDATE 3

As the tag variable made available to your template is now the tag’s slug, make sure to update the code to query for the tag model to use the slug param.

{% set tag = craft.tags.slug(tag).first() %}