It's basically a sales tax, but with a reclaim of the sales taxes paid on 'input' goods. So If you make cars you charge a VAT of, say, 20% on the sales price, b

It's basically a sales tax, but with a reclaim of the sales taxes paid on 'input' goods. So If you make cars you charge a VAT of, say, 20% on the sales price, but get back the 20% tax you paid on the steel, and the tyres, and everything else. The net effect is that it's a sales tax on the value that each business adds to the product, rather than being compounded as goods are resold. It's still regressive, though.