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Because of competition. Your competitor who lowered prices by 1% would eventually drive you out of business.

There is a lagging effect, but these taxes are just a reduction in cost which eventually get passed to consumers. Assuming the market is competitive of course.

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Unless there are pressures to do otherwise, your competitor is likely to do the same as you. If customers accept the current price and there is no external pressure to lower it, lowering it is likely not a good idea, and unless the market is unusually competitive, sales are unlikely to increase without a substantial drop.

I think that you're not acknowledging businesses that don't compete solely on price, like house-cleaning, cigarettes, alcohol, massage, SEO, etc.

Many many businesses would want to keep the extra money that tax breaks afford them. I don't understand how pointing this out is not adding to the conversation.

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