Robert Frank argues that the value people derive from goods is contextual: whether or not they think their house, for example, is a nice house depends upon the size and quality of the houses around them. Thus, when the wealthy expand the size of their homes, others' homes begin to seem of low quality by comparison, encouraging them to upgrade their homes. But this, in turn, makes the large homes of the wealthy seem not quite as nice so they upgrade again, perpetuating an arms race where everyone wastes resources just to maintain the value they were originally deriving from their goods.
The consumption tax is intended to disincentivize this wasteful spending, hopefully capping the arms race so that resources can be devoted to other sources of value.