No, if you bought groceries for them, that is retail. If you buy a new house or car for them, that is retail. Retail is taxed.
Well then some business to business transactions are taxed? How do you figure out which ones? If I buy toilet paper to use in my office is that retail? How do you track it? What about other office supplies? If I provide health insurance is that taxed? How are leased items taxed? If I buy an item I have leased, do I have to pay sales tax again? Most NRSTer's claim that all business to business are not taxed, but you are telling me some are....
Do you think its as simple as the clerk asking whether this is a retail (non-business) or business purchase and charging or not charging the tax? Do you think the business buying his employee's groceries will honestly answer the question if their intent is to avoid the tax for their employees? If I go to buy a car, how does the dealer know if it is for personal or business purposes? It must be based on what I tell them. And if the buyer of the car is dishonest, who will come back and determine the buyer should have paid the tax.
The distinction between business and personal expenses can be very gray under our current system. Simply changing the manner of taxation will not change the "grayness" of this issue. Here's another example. If I run a daycare out of my home, some of the food and toilet paper and paper plates and the utilities to run my house and the cost of the house itself are business and some are personal. Who will determine that the day care operator is honestly reporting the correct portion of the personal expenses and the correct portion of the business expenses.
Let's say I build a rental home. If that's a business transaction, I'm assuming the cost to build the home would be exempt from tax. But then after the home is built and either rented for a short period of time (or at least attempted to be rented to make it look good) I move into the home. Who's going to catch the fact that I should have paid tax on these purchases. Without a compliance agency people would have a field day with this.