Well, in the short run taxes are going to increase due to the fact that governments try to overcome the deficit caused by lack of being able to print valuable money. 

I think I would never kill income tax or other government services if the government authorizes bitcoin for their affairs and provides different facilities for bitcoin use in the state, especially countries need to start their own wallets so they will run their duties for bitcoin currencies and they should let the bank use bitcoin.

Not really its up to the government how they regulate the btc so it can be taxed. The government can do it in the payment. they can ax the tax in their.
In my country they do that, the bank deducted the tax when you withdraw your money which come from cryptocurrency.
For me it is okay to be taxed than to be banned.

maybe it will kill the income tax, because earning in bitcoin doesn't require paying taxes thats why i said that it may kill the income tax.
When you earn in bitcoin your money is in you and no one's requires or pushing you to pay your income tax not like in other business or job you are required to pay your income tax.

As you said i don't that all the tech savvy users are dealing with bitcoins most of them won't be even having much idea on what it maybe they might come to know some like it is good investment and it was not much popular even though now it became famous in the globe it will still take time for all to start using bitcoins as far as tax is concerned it is not going to affect the tax system as people will normally cash out their bitcoins when they find it profitable and while cashing btc out the money will be going to their bank and when the money reach the bank if the amount is high as per the rules of the nation they will automatically get taxed for the amount that comes in the bank so i don't that the tax will be dried because of btc.

That is the one of other reason why goverment affraid to bitcoin. im sure they are gonna ask for taxes and try to control them

But if the government implements a sort of VAT on Bitcoin transactions (for services and products offered by businesses) I think everyone can benefit

In some countries, income tax is paid and calculated by the citizens themselves. This is a very correct practice. When a good tax service is organized, this will not lead to a significant reduction in taxes.

Taxes drying up is a problem? Do you work for the government?