DONNA, Texas — In 2008, at least one local business owner expects to pay more taxes, fire employees and lose customers to cheaper competitors in Mexico.

And he blames the Texas Legislature, which he and many others in his business say has unfairly singled out their clubs and handed them an unwarranted stigma.

On January 1, strip club owners throughout Texas start paying a $5-per-customer tax.

This charge — dubbed the “pole tax” by some — gives most of its projected $40 million of proceeds to help rape victims.

A strip club in Amarillo has challenged the tax’s legality, saying it discriminates by not targeting nude modeling studios and adult movie theaters. They also say it violates the Texas constitution, which requires a quarter of all occupation-specific taxes to benefit public schools.

And nationwide, club owners are reportedly paying close attention to the precedence Texas appears to be setting on the matter.

The Rio Grande Valley is home to many strip clubs and topless bars. Pharr hosts popular Stilettos and Xoticas, and Mission is home to Pleasures and Valley Girls. All these clubs must now pay the $5-per-customer tax, and their owners are not happy.

Joey Holder owns Valley Girls, which also operates clubs in Donna and Harlingen.

He has spoken with lawyers and other club owners about the issue. Holder called the tax a violation of his rights as a business owner and an insult to exotic dancers’ freedom of expression, guaranteed under the First Amendment.

“It’s definitely a breach of the First Amendment rights, the Constitution and everything else,” Holder said during a phone interview. “What is happening to the American dream? To life, liberty and the pursuit of happiness? I was born and raised in the United States.”

Taxes should not discriminate based on the type of entertainment, Holder said. No levy targets movie theaters, adult video stores or cable pornography. And Holder said that is unfair to strip club owners.

Valley Girls charges a nightly $5 admission charge to customers. That may now rise to $10 to make up for the new tax, something Holder fears could deter customers. But there are few other options to meet the new tax requirement.

Hidalgo County ranks among Texas’ poorest, with an average personal income of about $17,000, according to a report from the Federal Bureau of Economic Analysis. Many of the county’s strip clubs feature gravelly parking lots with hand-painted signs, on the outskirts of town. Unlike bigger clubs in Houston and Dallas, they charge $10 or less for admission. Owners here say North Texas clubs that can already charge up to $20-door prices will suffer less.

Here on the border, however, higher strip club prices will likely send customers into Mexico, where adult entertainment prices are lower and contact laws with the dancers are looser, they say.

Pole tax supporters in Austin say they do not aim to shut down Texas clubs. They simply pushed the tax to raise money for victims of sexual assault.

“This is an industry that largely employs women, and this gives them an opportunity to raise funds for a crime that affects women,” state Rep. Ellen Cohen, D-Houston, told The Associated Press. Cohen sponsored the bill, which the legislature approved in May.

Opponents say no connection between rape and strip clubs exist, and the tax will hurt the many women working in these clubs.

At Valley Girls’ location in Donna, none of the dancers knew of the tax, said general manager Letty Rosales.

“They have no idea,” Rosales said moments after coming out of the club’s dressing room. “I didn’t even realize that until I went in there to ask.”

Rosales has managed the clubs for three years and says she strictly enforces no-contact laws. She resents the law linking gentlemen’s clubs to sexual assault; men simply come there for the thrill of the tease, she says.

For now, the outrage from owners will merely be pent up in law suits.

Authorities have scheduled a hearing for Jan. 22 in Austin, at which point a judge will decide whether to grant strip club owners’ request to stop collection on the fee until the litigation is settled.

As things stand today, though, the Lonestar State’s days of tax-free teases are over.