RUSSIA'S LOAN TAX BAD FOR BUSINESS

What will they do next?

Oil companies and other investors in Russia must be tired of asking that question about the country's regulators, politicians, and tax collectors. The first two rules of Russian business are that there are no rules and that exceptions to the first rule can be expected to change with little or no notice. Many Russians, it seems, have yet to comprehend the strength of capital's revulsion toward instability.

What other explanation can there be for Moscow's latest surprise--a tax on loans from abroad?

LACK OF URGENCY

Russian authorities say the tax enacted last December, aims at stopping Russian companies from disguising revenues as long term loans in order to dodge a 20% value-added tax. The new tax can apply at the rate of 20% of value plus an extra 3% to any loan not passing through a Russian bank to a Russian business concern. The American Chamber of Commerce in Moscow, representing companies based in the U.S., has issued a letter of protest.

Officials in Moscow last week gave assurances that the tax would be revoked. But they hardly rushed to complete the job. Their lack of urgency toward correction of a serious commercial error gave rise to speculation that the loan tax was a protectionist scheme on behalf of Russian banking.

The direct effect on oil companies probably will be slight. Partners in the biggest exploration and development ventures are making equity investments, not loans. And they try to have their agreements enshrined in legislation. That way, the law affords at least some protection against the twists and turns that have come to characterize Russian commerce-unless the law somehow changes. These protections should shield companies from the latest mischief.

Oil companies have seen other quirky taxes come and, for the most part, go. Economic necessity usually prevails against the worst proposals. At some point, though, a sense of necessity within the Russian government should begin to resist commercial atrocities. It's not happening yet. The loan tax thus aggravates the biggest problem foreign companies face in the country: instability. The question about Russian officials that so discourages business activity still, therefore, applies: What will they do next?

POLITICAL UNCERTAINTY

The issue of the loan tax arose at a time of growing political uncertainty in Russia. Setbacks to President Boris Yeltsin's reformist allies in Government have raised questions about the country's directions. Complicating the outlook is a Commonwealth of Independent States economic summit earlier this month in which Russia reasserted its influence over member nations in commercial affairs. At least for now, the group seems headed toward "economic union" with Moscow at the center of things. It's an old game of compromise between politics and economics, trading independence for access to markets. It's also a measure of the role economic desperation plays in the politics of much of the old Soviet Union.

Outsiders are left wondering what happens when the economically feeble realign with a Russia whose main allure can only be numbers of appetites. Political reconsolidation around Moscow is not inherently bad; hopes behind it just seem sadly misplaced. All members of the C.I.S., Russia included, must understand that nothing of economic significance can happen without capital. Moscow won't be the place to find capital until Russians get control of their urge to tax what they and other citizens of the C.I.S. need most: foreigners making money on local loans and investments.