Government should exist to do things that we as citizens cannot do for ourselvs, such as national defence. It shoukd also serve as the independant umpire.
For example, big company X hires goons to kick my off my property to build a car park. I shoot and kill several goons, some of whom shoot me. A government would make a law saying that big company X cannot disposess me, so that I don't have to shoot their goons. If they do, then the government provides a means of redress that is, in theory, independant and impartial, and therefore prevents oppression, blood fueds, rampant goon-killing, etc.
Its a lovely theroy, and work mostly in practise. Where the system breaks down is when government starts doing things that we CAN do for ourselves, like provide an income. It also oversteps the mark when it limits the freedoms that is says that it is trying to protect. It also beomes intrusive when it takes the position that it owns they country and its citizens, rather than the other way round. A good example is here, in Australia, with regards to gun laws. our firearms legislation confirms that the ownership and use of a firearm is a privilage, not a right. Aside from the intrinsic rights and wrongs of this specific issue, who is the government that it can grant privilages? It takes the position that it owns the country and its citizens, not the other way around. Our rights here exist in common law only, and as such, can be nullified when the Crown, working though the agency of the elected government, decides to limit those rights.
Where the actual line is drawn depends on who is doing the drawing. Personally, I think that government should be minimalist in appliction, and therefore in intrusion, providing for things like defence, certain infrastructure, the administration of the law, etc. but always bound by a strong constitution that specifically defines its powers, and is difficult to change. If that means paying tax, then so be it. If that means needing an (external) passport, then so be it. If that means needing to register births, deaths and marriages, ok. But it does not mean that I should be tracked, wiretapped, searched, questioned, etc. when going about my daily business with no hint of suspicion. If it is reasonably suspected that I am going to commit a crime, then have evidence of that and arrest me, charge me, and put me before a court. If not, then let my go about me business. If I actually commit a crime, then the same applies. Otherwise LEAVE ME ALONE!
Sorry for the rant, but our laws with regard to terrorism and rioting are becoming very draconian, and IM NOT HAPPY!