Indeed.. but I'm less cynical about people widely understanding the need for their Government to receive some taxes. It would perhaps require a change in thinking and perhaps that's too big a step just yet - for us to trust people widely.
I'm not cynical about that either. People know they need public works, and that those public works need to be paid for. They just don't want to be the ones paying for those public works, if they know other people aren't paying.
If merchants were obliged to use UK-Coin for transactions, for example, perhaps the majority would do. There are always and have always been ways of avoiding taxes but on the whole it seems we have developed a society that understand that Government does have a useful role to play.
I think it's a wrong 'design' to put taxation rules in the coin system. Bitcoin-like systems are designed to be inflexible when it comes to rule changes. OTOH, the need for taxation changes with the economical and political climate, and there is no such thing as a 'right' VAT level(*).
Also, the organization receiving the payments would be even more powerful than today's government: if people don't want their government anymore, they can't get rid of it by not paying taxes anymore: in order to stop paying taxes, they'd have to switch to an entirely different payment system, which makes it extremely difficult(**). If you want to know how dangerous this is, have a look at the
resource curse: governments that don't depend on taxation tend to be less responsible. The same will be the case if people can not stop paying taxes.
So, it's better to keep the coin rules simple, and organize taxation in a different way.
Personally, I think Government does too much atm that society more widely could do better for itself but there will always be a need for the representation that is Government and considering the limiting cases of where everyone uses cryptocurrency, I wonder what that suggests for providing resources to Government. Expecting people to donate to Government isn't realistic.. half the reason we have representation, is that it's easier for someone else to action our interests.
Perhaps the future of tax might be simply based on income tax and voluntary payments but I doubt that it could be that simple just yet.
Income tax is just a variation on the VAT tax theme. I call both of them a 'transaction tax'.
Voluntary payments aren't going to be very high, unless people can 'prove' to each other that they paid: this will allow for a 'social pressure' system to kick in. Bitcoin allows people to generate such proofs, so this is an interesting possibility.
Involuntary taxation has to be based on what is enforceable. Bitcoin reduces enforceability on monetary transactions and on monetary property, but some physical property (e.g. houses, factories) can not be hidden, so that can easily be taxed.
(*) I guess many people here would disagree and say that 0% is the right level. But even libertarians agree that public works need to be funded, although they want to organize it in a purely voluntary fashion.
(**) Such a switch has to start small and grow gradually, like Bitcoin is doing. A government that's aware of the danger will stop such a switch when it is still small. On the other hand, a tax revolt can grow very quickly as a 'viral' idea through the population, since people can still keep their jobs and pay their food while joining the revolt. The speed makes it hard to control for the government, so the government has to prevent it by keeping the people happy.
