If you're not doing anything wrong (which somehow doesn't seem likely for most of the people who visit this site) then what do you have to worry about?
Mob justice?
That is why you privately agree to a usage policy that typically states that they are allowed to monitor your activity and cut you off for virtually any reason ("abuse of the network", worded so that it can literally be defined as anything they want, is a popular implementation). Beyond that, you decide where and how to send your data; if you don't want others seeing it, the most advisable course of action is to avoid sending it where and how it can be easily seen. If you think this hurts your ability to use the Internet effectively, welcome to the wonderful world of trust problems. If you think this is something endemic to the Internet, you haven't been paying attention.
if it was then my taxes should be paying for it and not me
If it was funded through taxes, you'd still be paying for it...
Getting back to the original topic, the problem with creating some scary demon like "Policeware" is that the politicians (elected and hired alike) supporting such measures will just push it piece by piece, correctly asserting that each particular piece isn't "Policeware" because it's still up to somebody else to implement it / choose to use it / enforce it. What's more, they'll be oiling the PR machine the whole time so that by the time the final pieces fall into place, public opinion could very well end up being in favor of the measures.