Internet Service Providers must absorb the GST or pass on the tax to their customers -- just three days before the introduction of Australia's new tax system, providers are jostling for position.

Perth-based ISP iiNet, which has decided to absorb the GST on behalf of its 46,500 subscribers.

"The logic behind it is to try to get as much cost savings and benefits as we can and pass it on to users," iiNet Chief Financial Officer Clayton Hollingsworth told ZDNet Australia.

iiNet claims its headline accounts have not changed in price for five years and stressed to ZDNet Australia that a price hike a couple of weeks down the track definitely isn't on the cards.

"We've pulled out all the stops to achieve this policy. It would be commercial suicide to change pricing in the near future," Hollingsworth said. "We have spent a long time doing the numbers -- this decision has been in gestation for the last nine months," Hollingsworth added.

iiNet's services are currently charged at 2 cents a minute (AU$1.20 per hour), or a flat rate of AU$40 per month for unlimited Internet access -- this pricing will continue inclusive of GST.

One.Tel's Internet arm, One.Net, claims to have one of the cheapest plans on the market and by absorbing part of the GST follows close on iiNet's heels.

Customers are currently charged 2.1 cent per minute or a flat rate monthly fee of AU$24.95 for unlimited Internet access.

If One.Net, with a customer base of 165,000, applied the full 10 percent GST to its services, "margin would be reduced a fraction too much," a One.Net spokesperson told ZDNet Australia. "We are trying to meet everyone half way," the spokesperson added.

GST inclusive charges will be 2.3 cents a minute or a flat rate fee of AU$26.95 per month.

Other ISPs ZDNet Australia interviewed will add the full GST of 10 percent to customer bills as of July 1.

OzEmail's OzE3 plan currently charges a monthly access fee at a GST exclusive rate of AU$7.50 per month for 3 hour access. This will rise to AU$8.25 per month and excess hours -- charged at a GST exclusive rate of AU$3.60 per hour will rise to AU$3.95 per hour.

Meanwhile, Optus' Internet pricing for its five-hour Netsaver plan is AU$9.95. The next 20 hours are charged at AU$2.00 per hour.

The same service, provided after July 1, will cost AU$10.65 with the next 20 hours charged at AU$2.20 per hour.

Optus' NetDays service, which offers unlimited access between 6am and 6pm Monday to Saturday, is currently charged at a flat rate of AU$24.95 plus AU$2 for every additional hour. Under GST, NetDays will cost AU$26.75 with AU$2.20 charged for each additional hour.

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