I was thinking about a similar concept for the government tax collection as well. If the government finds a way to get some alternative source of income, it should even be possible to create a tax less economy.
I'm afraid I need to disagree.
First of all, most countries will not accept crypto as a way to pay taxes. Simply because it would mean, that crypto is considered "currency". And that would give crypto enormous rights, which neither central banks or commercial banks would like.
I don't think it will change - not as long as central banks have so much control over financial systems. Crypto is mostly used as a store value and I only see it moving forward as such.
On top of that - you may not fully understand idea behind taxes. In theory no country require collecting taxes. Money (in theory) could be simply printed and pumped into economy, without any limitations.
In the past taxes didn't exist in current form. But then many countries failed because whenever currency has been losing its value - people would trade this currency to any other one. Creating even more selling pressure and crashing such a currency.
To avoid it - goverments needed to create some internal demand for their own currency. To avoid situation, where all people are selling currency whenever they get paid. That was the case in the past and number of economies crashed and burned because of that. Venezuela is currently also great example of it. Whoever gets their salary in Boliviar - is selling those boliviars and moving resources into anything they consider "safe".
Taxes are creating such a demand. On top of that morgages and loans are creating such an internal demand as well.
Let's say I would earn in Indian rupee and I would expect value of this currency to drop. I will trade my earnings to USD/EURO/gold/crypto - but I will keep some rupees to cover my dialy expenses and also I will hold enough to cover my morgage and pay taxes. If not for taxes - I would end up dumping even more rupees.
Am I makins sense? I hope I do.