This study doesn't come from what I'd call an unbiased source--the retail industry. If a sales tax were initiated without it being a full replacement for the current system, they'd be right, too--because it would simply be an excuse for higher taxes. But, I think a flat out assessment that the economy would shrink if taxes were collected in a different way isn't very convincing.
The entire nation's financial planning (both business and personal) has been based on the current taxation structure. Such a radical shift can't possibly avoid being severely disruptive to those plans.