The price of bread will be what the market can bear. If the baker can sell for $1.23, he will do it. OTOH, the competition factor will not be changed by the tax.
Of course that is true, but the economics for Bob's bakery and Jack's Bakery are the same, and if the price of bread with a 30% tax on it is higher than people are willing to pay, then one or both bakeries go out of business.
If the market can bear $1.23, then that's all it can bear. If the vendor is still getting $1.23, then you are not adding the 23% tax, which will make the price $1.61. So this vendor, whose cost has been reduced by 23% is trying to get $1.61 for a loaf of bread, when everyone else is lowering the price and selling more loaves, which results in a higher total profit. Competition will make the price go down.
If the market can bear $1.23, then that's all it can bear. If the vendor is still getting $1.23, then you are not adding the 23% tax, which will make the price $1.61. So this vendor, whose cost has been reduced by 23% is trying to get $1.61 for a loaf of bread, when everyone else is lowering the price so that the total price including the tax is about $1.23, and selling more loaves, which results in a higher total profit. Competition will make the price go down.