As Suzy is an inside dog, she rarely leaves my sight. I have the luxury for being home with her nearly all the time (except supermarket trips) so there's no need for a permanant collar/tag setup. I did buy one for her for when we go for walks so I can attach it to her harness. I'm in Australia and got it from a seller on eBay.
http://stores.ebay.com.au/Online-Sublime
They have all sorts of sizes for the tags, I got an xs for Suzy and it's not too big for her but can fit all the info I need on the engraving.
As other people have said, maybe his collar is too big and tags can be discarded but microchips can't.