Yes, I believe we do. But NOT an automated system. That will be abused heavily. I think a tribunal like system that LoL use to implement may be the way to go.
Something that rewards players for correctly recognizing and calling out toxicity, while also punishing the offending player. Ban their IP or whatever so they can't just make a new account, put don't make bans permanent until their second offense. Give them a chance to redeem themselves. If they don't then screw them. Sell all their gear, give all their gold to their little brother, and delete their character like the good ole days.