@necromancer See what I can comprehend applying my conventional wisdom is:
power of taxation lies with all bodies who are democratically elected by the people. this principle was established during AR and its main slogan 'no taxation without representation'
1) local bodies do have the power to levy and collect taxes, and this power is granted by the constitution itself. however, constitution has kept local needs in mind and instead of having a monolithic plan for the entire country has adopted a flexible approach and empowered state assemblies to decide which tax local bodies can levy in their respective domain (voluntary provisions of 73rd and 74th CAA). So, state assembly enjoy the power to decide which taxes a local body can levy and not to decide whether local bodies can have taxation power or not.
2) if we read about autonomous district councils under the 6th schedule they also have the power to levy and collect taxes.
so, asserting that only state and union legislature alone enjoy legislative competence of taxation, according to me will be a very narrow interpretation of the question and its underlying principle.
