They’re not gonna give up taxation. It gives a “use case” for fiat because it burns some fiat shitcoins from circulation and prevents hyperinflation.

However, it would be beneficial for governments to remove cap gains tax from small purchases made in bitcoin (e.g. $500).

Tax revenue from those are a drop in the bucket anyway and don’t make much difference, but it would boost businesses building on Bitcoin as a medium of exchange (whose profits could then be taxed more if they so choose).