Can I use less sugar for making this bread?
You can make a bread following this recipe, but reducing or omitting the sugar. Your bread will rise just fine, as the yeast can feed on sugars in the flour, as you suggest. The same is true for the butter and milk. Lots of tradititional 'simple' bread recipes use only flour, water, salt and yeast. You might have to slightly change timing and kneading procedure to get a good result.

That said, you will alter the flavour (and probably texture) of the bread. Whether you will like the result as much as the original recipe you can only find out by trying.