No, I have fully understood for a long time. You, however seem not to understand at all.
You brought up cars and tried to compare a low end vehicle to a luxury automobile. 50 cent hot dogs and filet mignon served at the finest restaurant are both foods, but they might as well be on different planets because of the market they appeal to.
There is a perceived value in that luxury automobile for those who buy them -- it's worth it. But the Hyundai buyer will merely acknowledge or assume a greater value, but will not spend the money because it isn't worth it to HIM.
When tax costs are legally removed, if the retailer tries to retain them to make a higher profit, he will only be successful to those limited few who percieve that value. For those who don't, there will be plenty of retailers who will have dropped their prices.
It seems that your fears and the projection of that fear is guiding you, not reason, facts, and experience.
Have it your way, I'm tired of arguing this point with the FT kool-aid drinkers. I'll leave you to the FT fantasy world where businesses prefer to indulge in price wars to see who can go bankrupt first, instead of taking a 20% margin improvement over 10% more business.