We keep hearing that taxes destroy the motivation to work. I am not aware of any evidence that supports this. In fact countries with high taxes (northern Europe and Japan) have some of the hardest working people, whereas countries with low taxes (eg Monaco and other tax havens) seem to be filled with people who do very little work at all!
In fact there is evidence that taxes have been used effectively to encourage people to work. This was the case when European countries colonised less developed lands and wanted to employ the native people to work on their farms or in their houses, factories and mines. They were understandably reluctant to do these jobs because, being subsistence farmers, they had no need for the wages. This problem was resolved by colonist by imposing a poll tax or hut tax on them, payable in the same currency that was paid to workers. Since payment of these taxes was enforced by threat of punishment it was now necessary to acquire the currency. This motivated them to work for wages. Taxation therefore encouraged working by creating a demand for currency needed to pay the taxes.
The simplest way for a new currency to be introduced and have it accepted is to impose a tax payable in the currency, or allow existing tax obligations to be settled using the new currency. It has been suggested in Greece, for example, that the Greek government start paying wages using government IOU's which would be accepted as payment for taxes. This is an ingenious solution to the key problem facing Greece and other Eurozone countries which is a severe shortage of currency in circulation.
If one considers that taxation is a debt imposed by the government, a good case can be made that the real value of any modern currency ultimately derives from the fact that it can be used to repay debt obligations. These could be debts to private banks or debts to the government (taxes). As long as there are debts payable in a currency, and payment is enforced, there will be demand for that currency.
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