Tax law is dependent on your country and locality. Recently in the United States, the IRS has declared that Bitcoin is to be treated as property, not currency, for tax purposes. All income in the US is taxed, regardless of what form it takes. If youre paid in bitcoins, youre supposed to pay taxes on your earnings at the BTC/USD exchange rate when you receive payment.
Is it a good decision or bad?
I do not agree if BTC usage is taxed.
If they use BTC, but they don't have BTC in their wallet, do they have to pay taxes?
I think the government is enough to receive building taxes, vehicles.
That is the way of government to make their country rich, with taxes. but it can be very helpful for developing countries, at least regulations and taxes can accelerate the development of bitcoin too right? and you are still free to pay taxes or not, because I think regulation will not remove decentralization from the internal.