Money collected as punishment for crimes should be destroyed either literally or as a bookkeeping entry, so nobody* benefits from its collection.
Ditto punitive damages from civil suits.
This would remove the financial incentive for governments to fine people and remove the financial incentive for plaintiffs to seek high punitive damages. The stated "justice/deterrence" purpose of fines and punitive damages would remain.
*I'm ignoring the theoretical, negligible gain in the value of everyone else's dollars as global supply of US dollars shrinks by the amount of the destroyed money and the not-necessarily-theoretical hit to the local or national economy if money that would otherwise be spent on goods and services by the person paying the fine and/or by the government collecting the fine is lost.