Flaherty said he's close to announcing an arrangement that gives B.C. more time to repay the money the federal government gave the province to help with its transition to the HST.
"Their view is that they'd like more time to repay it," Flaherty said Monday in Victoria following a meeting with provincial and territorial finance ministers where Ottawa announced new health transfer payments to the provinces and territories.
Falcon was one of the few finance ministers to endorse Flaherty's plan to increase health transfer payments by six-per-cent annually until 2018-2019, but then tie them to the rate of economic growth without allowing the increases to fall below three per cent.
Ontario, Quebec, Nova Scotia, Manitoba, Newfoundland and Labrador and Prince Edward Island stood together to voice their anger at what they called an imposed health transfer announcement by Flaherty that removes up to $21 billion from health-care funding.
Ontario Finance Minister Dwight Duncan raised the HST repayment issue Tuesday when asked why he thought British Columbia supported Ottawa and not the dissenting provinces.
"B.C.'s got its own issues trying not to pay back the HST, so I can't account for what they have to say," he said.
Falcon could not be reached for immediate comment Tuesday, but said Monday British Columbia supports the overall thrust of the health transfers because they seek to control spending during tough times.
Flaherty said British Columbia isn't questioning repaying the HST money, but it is looking for more time.
"It's due at the end of March 2012," he said. "I'm hopeful that we'll be able to come to an agreement very soon, which would give the province some additional time to repay the total amount."
British Columbians rejected the combined tax in a referendum last summer.
Flaherty said he's been negotiating a repayment plan with B.C.
Falcon would only say negotiations to repay the HST cash are ongoing.
"What we're talking to Jim about is the terms of the agreement," said Falcon. "Those conversations continue and I'm not going to negotiate that in public."
Recently, B.C. Premier Christy Clark travelled to Ottawa where she said she asked federal officials to forgive some of the money because the HST, which became law in July 2010, will have been in effect for almost three years when B.C. finally drops the tax in March 2013.
Flaherty has said nothing about reducing the amount owing.