On Thursday the Quebec Liberal government tabled a budget projecting a $3.9-billion deficit. This deficit has happened for the first time in the last decade, but the government is hopeful that a 1-per-cent sales-tax increase beginning Jan. 1, 2011, will eventually help eliminate it.

"We will come to see the years 2008 and 2009 as defining periods during which a new era full of hope was forged in the brutality of a global financial crisis. This budget was prepared during these turbulent times," said Finance Minister Monique Jérome-Forget in her budget speech in the National Assembly.

With the projected deficits, the government will have to seek new sources of revenue. The hike in the sales-tax is expected to generate $1.2-billion a year. A strong action against tax evasion and tax avoidance schemes is estimated to add another $900-million in revenues. The government has also resorted to the broadly out of favor move of indexing user fees, with the exception of the $7-a-day daycare rate.

However, the business community is still of opinion that sales-tax and tariff hikes are a long way from what will be needed to reach a balanced budget again in five years.