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According to Jared Diamond in his book, "Guns, Germs and Steel", it starts when there is enough food being produced to support non-food producing people.
Some may be potters and trade pottery for the surplus food. All manner of people may trade all manner of things for surplus food. However, government starts when some decide that they'll just steal it.
They then institutionalize this practice by having the farmer bring the surplus food to them. They keep some, and give the rest to others as favors. This is called "kleptocracy", or "rule of thieves", and is the basis of all governments.
From primitive times to modern times, it is always a case of "Give us the extra, or we'll hurt you. We'll keep some, and give some away."
Advances in government after that have been little more than advances in justification of it by religions and philosophies, and finding new manners of taking more "surplus".
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