Extortion is perhaps not the most accurate word, going strictly by its definition. Anyway, the objection isn't to taxation of taxis, but rather to outright excluding new entrants to the taxi market. Which many cities do, via the medallion system.
not that i'm a huge fan of unfettered capitalism, but just clarifying...
If you feel that use of the streets is not being rationed efficiently, or that heavy users of the streets are not paying enough relative to light users, then you can impose some kind of sliding scale or conditional tax on street use. This is not at all the same as an absolute cap on supply.