Also known as GST.

VAT stands for value added tax, the idea is every step of production applies a tax to the consumer of their goods. If the consumer sells the goods on, they add on tax of the full amount to the end consumer, and claim back the VAT they paid when they bought the good.

Generally the public don't on-sell goods, so they are not set up to claim vat back. So the end cost falls on consumers not businesses.

One question this author cannot answer is given the following scenario, why is VAT levied at the rate it is.