I feel like I might be missing out on something, so could you explain to me how would sinking items or "returning item value" be beneficial to an average Toribash player or the game itself? Why is it bad if people don't buy stuff from Toribshop?

All I can see is you trying to make items worth more and benefit from it with your inventory. I don't see any other motives that would drive anyone to such suggestion because it is very inconvenient and unnecessary for players and the game.