Was trying to figure out why this felt so familiar, then I remembered it's literally a plot point in the game Beholder 3, a game about an excessively oppressive surveillance government. Wild.
It's also similar, though not quite, to the plot of Footloose. In that a town banned dancing, but this seems to be an effort to limit it to traditional folk dances.
More than just that one game has this plot point, I'm sure. During the early 90s, when Joe Leiberman and Tipper Gore made "Violence in Music/Movies/Games" their cause celeb, we got a glut of artists producing dystopian prophecies of hyper censorship.