I guess the point is that it's easy to not report when you are dealing with the town's currency.
If you take it to the extreme and consider a barter system. I can be a farmer and give a few tomatoes to the barber who cuts my hair. The government does not know what happened and you do not report the income as earned.
You are right that it's identical to paying under the table but I think there is a higher incentive to do that with these town currencies.
Thanks for making me rethink my logic.
Which is perfect, barter works, fuck the government and their theft of your income.
This is exactly the idea behind BarterCard
http://www.bartercard.com/
You could pay them under the table (not report it to the government) in cold hard cash using the British pound just as easily as using a local currency. I can't see how using a local currency would make it any easier.