Fears that organised crime gangs have a foothold in the industry, and that current rules are not enough to prevent criminality, have led to calls for a toughening of the licensing system.
Plans to give councils greater powers over licensing and enforcement have been revealed which would affect the thousands of drivers in Glasgow but should, according to bosses, benefit legitimate firms and drivers.
Kenny MacAskill's proposals include:
l Letting councils put a limit on the number of private hire cars on the streets.
l Putting private hire drivers through a 'knowledge' test similar to Hackney cab taxi drivers.
l Making it a requirement of any licence holder to prove they are 'fit and proper'.
l Updating licensing conditions of cars, drivers and booking offices.
l Extending these conditions to include smaller firms, to bring everyone under the regime.
Glasgow has just over 1400 Hackney licences, but thousands more Licensed Private Hire Cars operate in the city.
Mr MacAskill said: "While the vast majority of taxi firms operate within the law, this will address the influence of criminal groups and individuals within the taxi and private hire trades.
"It is essential that they are regulated to the appropriate standards, so that the public is protected from harm while using the service and the industry is protected from infiltration by organised crime.
"Our views are not fixed and we are committed to an open and productive discussion on these proposals.
"Ultimately, we want to bring all drivers and firms up to the correct standards."
Taxi firms have long wanted action to protect passengers and legitimate companies from the criminals who have entered the market.
Bill McIntosh, of the Scottish Taxi Federation, said: "The Scottish Taxi Federation has long been calling for changes to the licensing regime so we welcome this consultation.
"Passengers will want to know that they are being served by responsible businesses, and taxi firms and drivers also need more protection from rogue elements, and assurance that the licensing regime is consistent in its aims across Scotland."