I've heard the same rumors. In fact, the treasury has been pushing this idea around for the past 30 years. A VAT is a consumption tax just like a sales tax. I'm for a flat sales tax instead of the income tax so I would definitely support a VAT for the same. The main difference between a sales and a VAT tax is that in a VAT tax you don't see the amount of the tax at the point of sale like you do in a typical sales tax. A VAT simply results in price increases to the extent of the tax. A lot of people get hung up on this idea, but I don't think it is that big of an issue for two reasons. First, you know the flat rate so even if you don't see it posted on the price of your cereal, you know you are paying that amount of tax on your Wheaties. Second, it is not like the income tax is any better. Very few people know their marginal tax rate until long after they have earned the income in question. Even despite this arguable shortcoming, I still think a flat consumption tax is much better than an income tax (i.e., it doesn't tax savings or investments so it reduces the current disincentives that result in lower overall productivity).
However, I am not for a VAT that merely supplements tax collection methods. So basically, while I would be in favor of a VAT to supplant the income tax, I would not be in favor of one to supplement it. [I guess I went through all that typing just to say I don't support it. Hah!
EDIT: I just want to note, that a lot of people are likely going to be against me and write this off because Pelosi recently suggested it, but a consumption tax is a very conservative idea (i.e., if used to supplant the income tax, it would remove the progressive rate structure from taxation).
