"If tourism industry, state governments and the centre are loaded with higher taxes then we will have less tourists and lesser collection," he said at a Tourism Ministers conference here.
Hinting at the existing higher taxation on tourism sector, Jaitley said, "Today, wealthy Indians are finding it cheaper to get their children married in Thailand than in Indian hotels. It's a hard reality."
Tour operators are demanding reduction in various taxes for long particularly exemption of service tax on packaged tours as the payment is made in forex.
Jaitley said the present government at the centre believes that "we are low taxation government not high taxation. If you leave more money at the hands of tax payers he would spend more. The economy expands more. If you levy lower taxes then products will be cheaper their saleability increases."
Seeking lower room rates and deduction in airfare, the Union Minister said, "This principle applies to airlines and hotels also. If our airline is going to be costlier, if hotels are going to be costlier in comparison to the rest of the world, our volume will never increase. Costly rooms rates means less tourists. Less tourists means lower revenue for the government. Higher taxation on tourism means less tourism. which means lower earning."
Highlighting the importance of tourism industry, he said "if India is to grow and Indian economy is to grow then tourism is certainly one of the low hanging fruits which is achievable."
Dubbing the tourism sector as one of the "underachieved sectors" in India, Jaitley said we have everything going for tourism in the country like large coastline, huge mountain range in various parts of the country, seasonal variations in terms of weather, most beautiful rivers and forests in different parts of the country.
"We have archaeological monuments which are of great global interests. We have some of the best pilgrims centres in the country. We have large cultural heritage and we have great metropolitan cities. So world should have been extremely curious to see what lies in India," he added.
Jaitley said the foreign tourist arrival figure of seven million is "inadequate" considering India's vast tourism resources.
"Seven million tourists is an inadequate number," he said.
Asking state Tourism Ministers to introspect, he said, "we must introspect where we are. You need to lay down red carpet otherwise tourists will not come. Like for selling a product consumer is the king. Today tourist is the king. We are at his mercy therefore our ability to attract must be adequate."
Describing tourism as one of the largest employer, Finance Minister said, "it is one of the major economy resources. There are countries in the world which thrive exclusively and predominantly on tourism. There are countries which has one or two tourist attractions and they market them all over the world."
Referring to relaxation in visa regime he said, "The concept of e-Visa is a measure to facilitate easy entry for foreign tourist into the country. The more they come more they spend and more Indian economy will grow. So short-sighted measures like higher taxes in the long run we are under-utilising our potential. It is neither good for the economy of the country nor tourism."
Taking note of law and order problem, he said, "One incident of rape in Delhi was enough to cost of million dollars in terms of lower number of tourists. We have national responsibility and God has given us everything which tourists wants to see, we just have to catalyse that process and make sure of that we take right step."