I have been thinking of this for long and the reason being that a lot of bitcoin transaction is going online everyday in many countries and i think government can generate IGR from this if possible. I am not a programmer and i have a little knowledge about bitcoin technologies but i just want to know if it is possible.
Not until people or the tax payers themselves decide to self declare their income to the government. I mean the exchanges can be said to meet KYC compliance but you can't say the same thing for the private key wallets as they are public wallets with no central company owning them. So taxing your bitcoin in private key wallets is next to impossible. All they can do is monitor exchange transactions and tax them.