Some entity has to be trusted with our data anyway, at least government supposed to have some accountability before the citizens, corporations have much higher incentives for profit.
It doesn't require only trusting the government (or another corporation) today, it requires trusting all future iterations of them as well. It may be a different story if the data was periodically purged, say after each administration for example.
Why?
I'm not arguing we don't need a government. But to silently take for granted that everything from income taxes to public roads and travel restrictions are a given jumps ahead here.
We could decide, for example, that the government shouldn't be allowed to centralize certain data and remove some of what we expect them to do instead.
How exactly government manages our data is a valid concern and in the modern world this needs to be reevaluated.
It would be good to clamp down on private companies collecting that data.
Is it actually a crime to upload a fake ID photo to a private company for age verification?