If the list of censored addresses becomes public, owners of said coins will be incentivized to spend (launder) them using non-compliant miners blocks a new set of addresses, and can pay a high fee for the privilege of doing so. The government will therefore have to draw up a new list of addresses.
However, the government will not be able to come up with a mechanism to permanently extend the pool of blocked addresses. Any mechanism for creating such a growing set of blocked addresses (so to speak) is equivalent to a tight commit set and implies a private, untraceable currency.
Now suppose on the contrary, that the list of censored addresses is not public. This means that the government is secretly colluding with a cartel to raise spending fees for a specific, unknown set of addresses. However, miners are necessarily anonymous (1 doublehash = 1 vote). Any such cartel is unstable and will necessarily collapse due to deviation.