Paying taxes / buying goods / etc with Bitcoin, is equivalent to selling the Bitcoin and paying with fiat, except that it might be more convenient and save transaction costs to do it in one step. Thus your question boils down to "Why would anyone 'waste' Bitcoin by selling it?" And of course there are many rational reasons to sell Bitcoin:
Who in their right mind would waste their Bitcoin on taxes or buying random stuff?
Can't comment on taxes because it's different in every country and depends on individual how they manage it.
Who would use their bitcoin for payments?
Holds only bitcoin and no fiat
Not interested to see few things in bank/card statement
Merchant accepts only bitcoin or ...