ok...maybe I didn't make myself clear. These are not street vendors. These are brick and mortar merchants who are in the wholesale business.
Say I have a little boutique where I sell handbags, scarves, and jewelry. I have to go somewhere to buy my product to resell at a profit. THAT is what this wholesale district is all about. As a merchant, I would have a Tax ID and pay the government quarterly based on my profit and loss. As an individual, I pay the taxes on the item when I purchase it.
Either way the taxes are paid to the government.
There is a vast difference in buying from a wholesaler and some guy selling out of the back of a truck.