Government, by definition, has a monopoly on the legitimate use of force within its territory. But it doesn't (even in theory) have total control over its space. It's constrained by its ability to fund and apply force (military dictatorships aren't inherently stable), by its relationships with stakeholders both inside and outside its borders, and to some extent by the consent (or at least the acquiescence) of its public.

To put it in a more concrete sense, the government can decide to tax whisky at a rate of $1m per barrel. But it almost certainly doesn't have the power to enforce this against moonshiners, rights and law or otherwise.