Haha, pretty much. In Sweden, the government is completely socialist. Everything is paid for (health care, a college education, etc) and that money to fund that has to come from somewhere, ie higher taxes. Businesses (in this case a retailer who sells jeans) has to pay much higher income tax (Sweden and some other European countries can be as high as 60%) and other taxes to keep the government from shutting them down, so they have to pass this cost on to the consumer in the form of much higher prices than we see here in the US. Imagine making $100k a year and only bringing home $40k. Unfortunately, we are headed in this direction and most people don't even know its coming....sorry for the political stuff....
Anyways, VAT is different than sales tax and has arguments on both sides. In theory, regular sales tax (like we have in the US) and VAT would be equal but this is not the case in the real world. Our sales tax in the US is a one time deal, and it is paid when the consumer purchases the goods. VAT is different in that in each step of the manufacturing process, a tax is imposed and passed on to the end-consumer. The seller charges a VAT to the buyer in each stage of manufacturing, and the seller pays the charged VAT directly to the government. One note though: if the buyer is not the end-consumer (like me buying a finished pair of jeans to wear), the VAT can be deducted from the tax that it imposes the goods sold and the government gets the difference. So the VAT is only paid on the gross margin for each transaction in the manufacturing/purchasing process except the last one, where the final good is purchased by the end-consumer.
Sorry to get all technical...check out the Wikipedia entry for more info.