You have described, in abstract terms, how governments arise. You start with competing protection rackets, and one of them becomes dominant and (more or less successfully) tries to suppress the others, declaring itself the only legitimate authority. Government pretends to have a “monopoly on violence”, but really doesn’t, and people continue pay protection on multiple levels.
“...and people continue pay protection on multiple levels...”
We already do....they are euphemistically called such things as “real estate tax”, “sales tax”, “business license” etc.