All the unique enchantments mods for 1.16.5 are incompatible with tax free lvls (lowers enchant cost)

There is a mixin collision, you'd have to decide between 1 of both.
If you're looking for cheaper Anvil Costs, there is a config for that in UEBase.toml

does this config remove the "Level Cost is too high" restriction on anvil?

Nope it doesn't @amirullahizzan
it just converts the XP consumed to XP points instead of XP levels.