The only problem on VAT is that it's regressive. People studied sales taxes until they solved every single of their problems, except for this, that in inherent to the activity. It's also the least regressive form of commerce taxes around, and the easiest one to mess with and so the government can take the worst impacts away.

And if you pair it with a capital movement tax, you can make it proportional. But we don't have anything equivalently good for capital movement, so most governments refrain from it.

Either way, if you want to argue that VATs are bad because they only tax one part of economical activity, that's an incredibly bad argument.