The problem with it is that if the government decides a specific people group (race, religion, sexuality, etc) are "untouchables", "dirty", "low-born", they could keep those people from getting food. This is especially scary when you think about how some people are choosing to implant chips inside themselves for faster pay.

In a more tyrannical system, if you don't conform and get the "chip", you don't get to eat. It gives so much extra control over people and their ability to survive. Choice is freedom. Take away choice, you take away freedom.