Because if I sell my item for 1 less gil and my retainer is in ul'dah but yours is in limsa, then the potential buyer if in limsa will buy your item rather than spend 100+ gil travelling to ul'day and avoid the tax just to save 1 gil as overall it men's he lost.
If I am undercutting, I want to be the cheapest option no matter where the player is buying from.
If I am making 30k+ profit on an item, reducing that by 1k to ensure I am cheapest is no big issue to me.