Olive Crane (right) makes her PST announcement in the Borden-Carleton Petro-Canada owned by candidate Jamie Fox. (CBC)

Progressive Conservative Leader Olive Crane says a Tory government on Prince Edward Island would reduce the provincial sales tax from 10 to nine per cent within its first year.

Crane said there could be a further one per cent reduction by the end of a first mandate depending on the province's fiscal situation.

"For a one percentage change, it means there is $20 million available to invest in Islanders. And, as you know … Islanders can make good choices with their dollars," said Crane.

"What economists and accountants tell us is that money will circulate two to three times. And as you know right now we're not living in ordinary times. You just have to turn on the TV and take a look at what's happening in Europe and the United States. We feel that it's the right timing to make such an announcement."

Crane said the measure would help the province compete with the rest of the country.

Wednesday was the first full day of the provincial election campaign and full of major spending promises.

The Liberals said if they're elected, they'll increase bursaries to students and provide interest-free student loans, beginning in 2012.

Crane chose to make her announcement at a gas station operated by Borden-Kinkora candidate Jamie Fox.

She said lowering taxes would ultimately leave more money in consumers' pockets and generate more economic activity.