Right, I see what you mean, and it is also one of my biggest problems with an extensive state administration. Furthermore, I think the state's way of collecting taxes is sometimes downright criminal (thats in general, not Eutopia specific). For example, when the state taxes the wrong amount, and you notify them, you still have to pay the late fines, even though
you told them about the money they were forgetting about. One of my biggest points is streamlining and cutting down on paperwork and administration as a whole, introducing computerized systems on all levels including education, and providing a permanent working country-wide service to solve problems that may arise with the new systems.
In short, the problem you present can be solved by improving state administration instead of simple cutting down on state interference.