TAXI fares in Glasgow are to rise by 6.5% after licensing bosses rejected calls for a bigger increase.

Cab bosses had called for a massive 12% rise to help ease the fuel burden on drivers.

But councillors believe the revised tariffs - almost double last year's increase - offers a fairer deal for passengers.

Taxi drivers across the city say they are being driven out of business by high diesel prices.

Glasgow Taxis had called for a rise of at least 7.86% to offset the rising cost of fuel.

But the firm, which owns around 970 "black hacks", appealed to the council for an even steeper rise arguing fares would have to increase by as much as 12% to compensate drivers for the loss in earnings.

They estimate the average taxi driver's fuel bill has increased by around £40 per week, from £80 to £120.

Despite the recent cuts in diesel prices it is still around 26p a litre more expensive than it was in January.

The last fare increase was in August last year when the tariff rose by 3.59%.

The new fares, with the 6.5% rise, will come into force in September.

One cab driver said: "It's not enough. We were hoping for at least 10%.

"By the time we pay for the meter's tariff to be changed, which is £30, and you factor in the time off the road it won't make any difference."

Licensing chiefs have also agreed a set fee for passengers paying for cabs by credit card.

Customers will only be able to pay for journeys using their debit and credit cards for fares of £12 or more, and a 12.5% fee will be added to absorb the cost of using the equipment.

Glasgow is to be the first Scottish city where taxi customers can pay for journeys using chip-and-pin technology.

Industry leaders in the city have agreed to a trial of handheld terminals in 20 to 30 taxis within the next two months.

If it proves successful, the kit could be fitted to Glasgow Taxis' fleet of 1000 vehicles.