With no real competition that's more or less standard operating procedure (price/demand curve?) in many businesses until the customer says "uncle".
By the way sellers (I'm sure you realize this and just made a mistake) of course don't pay sales tax buyers do of course even if sellers paid it would be passed along to buyers.
Let's take an example, albeit a simplified one. Suppose gasoline costs $5/gallon including a 25% tax on a retail value of $4 ($1), and that the profit of the gasoline manufacturers is also $1 (we're assuming vertical markets and perfect competition as well as round numbers, for simplicity). Consumers need gas to go to work and run errands, so although higher gas prices might result in some fewer road trips and pleasure excursions, overall gas consumption won't change too much in response to price swings. Now, the government decides to increase the tax to 50%, so the price at the pump goes up to $6. Consumers will grumble but they'll still need to buy gas, so they pay 20% more but the sellers still make $1/gallon profit as before. Why? because it's hard to substitute away from gasoline or change your usage patterns overnight, so if you need to go from A to B in your car you're just going to have to buy the more expensive gas. Shit.
Now contrast the market for gourmet cupcakes, which have lately been in fashion. Let's assume a cupcake also costs $5, and yields $1 in tax revenue (25% on $4). Because baking cupcakes is a bit more labor-intensive than gasoline production, let's say the baker's profit is $2 (which is not so far from the truth, and which helps to explain why there are so many gourmet cupcake companies lately). Now suppose Mayor Bloomberg disapproves of cupcakes because they have too much sugar and raises the tax on them to 50% ($1 -> $2), so now they cost $6. Well, $6 is a lot for a cupcake and there are many other delicious things you could eat for that price, so a lot of people switch and start eating other tasty snacks. Cupcake makers are going broke! All they can do is cut their prices. Suppose they cut their profits from $2 per cake to $1.50; now a cupcake retails for $3.50 + 50% tax, for a total of $5.25. Sales are not quite as good as when cupcakes cost 'only' $5, but a lot of consumers come back to snacking on cupcakes - let's say 2/3 of them. Some smaller cupcake bakeries go out of business, the larger/smarter ones increase their market share.
In this case, government revenue goes up by 50% (75c increase per cake * 2/3 as many customers), but the burden of that falls 1/3 on consumers (cost goes from $5 to $5.25) and 2/3 on bakers (profit falls from $2 to $1.50). What's different from buying gas is that cupcakes are strictly optional: there's a desire to consume them but no actual need, and if the price changes there are lots of other things to eat instead. Thus demand for cupcakes is extremely elastic and can expand or shrink in response to price.
Also, has anyone created a sales tax management company? That seems like it would reduce the burden significantly on small businesses.
Sellers will be responsible for paying this tax, not buyers.