When you raise the expense with taxes you eliminate the marginal player who was getting along with a narrow margin , unless of course he is willing to raise his prices.
He could also move out of the Mall, sell different products, or find a way to attract more customers. If he is really offering a superior product or service at the present price, then he could raise prices and still compete. His competitors have similar expenses to his, after all.
There is a European Car Parts House here that sold me a used wheel bolt for $3.00. When I took it back, because it was too long, he would not exchange it. Shortly afterward, I bought a NEW bolt that DID fit for $1.50. $1.50 is not enough to bother with, but the attitude was that this bolt HAD to fit, and we NEVER give exchanges.
I will never go back to the first place again. I have told everyone in my car club about this, and I don't think they will try it either. Price is not everything in running a business. Some people are just incompetent assholes.