If toxicity is so bad, disable the option to chat for players who get restricted.

They used to do this back in the days of the tribunal - just ever-increasing chat bans.

People would stop trying to clean up their act and start trolling games instead once they got past a certain point.

In addition to what Karunamon said, I'd love to know why you think permanent bans don't do anything. Most permanently banned players leave the game, or if they return they aren't toxic anymore. That's the goal, after all.