YOU MAY NOT be aware of it, but there's a good chance that the shopping center, housing development or even massage parlor going up in your neighborhood is being built with the help of the federal Treasury. One way that states and localities have courted businesses in recent years is by offering bond financing at bargain rates made possible by the exemption of interest payments from federal taxation. The use of federal tax-exempt bonds for private purposes has tripled in the last five years. The Treasury, alarmed at the $4 billion in taxes it is already losing annually as a result, is proposing restrictions to avert much larger future losses.

State and local officials are naturally alarmed by the prospect of losing what seems to them a cost-free way to attract and hold job-producing businesses. Most officials are willing to admit that now that every locality can and does offer bonds exempt from federal tax, the lure is no longer effective--if it ever was--in attracting new business into their communities. But they argue that the subsidy is needed to encourage expansion of local businesses (reference is typically made to small businesses, although corporate giants can and do get tax-exempt financing) at a time when interest rates are very high.

The officials are right when they say high interest rates are depressing businesses--not just small ones but big ones as well--but they are wrong in thinking that haphazard subsidization of locally favored employers is a good way to get the economy back on track or that the subsidies are not costing them anything. Private-purpose tax-exempt bonds now compete heavily with the traditional tax-exempt bonds that states and localities issue to finance their own public projects. As a result, interest rates offered on tax-exempt bonds have been pushed up to more than 80 percent of the taxable rate. This means that local governments are having to pay much more for their own borrowing. It also means that the major beneficiaries of the federal subsidy are not the bond issuers--the businesses or local governments--but high-bracket bond buyers.

The Treasury proposals would require that bond issuances be publicly approved by local elected officials --surely a minimum assurance that the locality really wants the development in question--and that after 1986 the issuing government make a token contribution to the project as evidence of its commitment. The proposals would also curb the ability of local governments to make profits from the bonds by reinvesting the proceeds in higher-yield investments, and keep businesses from combining interest subsidies and accelerated depreciation to produce a tax profit on investments that made no economic sense.

The striking thing about these proposals is that they seem to be the minimum conditions that one would want to impose on a subsidy of this sort. The Treasury limitations are a very modest attempt to keep what is essentially a bad idea from getting entirely out of hand--and a very timid compromise with the extremely persuasive case for abolishing tax-exempt private financing altogether.