Ok. Have a functionally correct Automator Folder Action that retrieves all available Tag names, and presents this as a selectable list once files are dropped on the assigned folder. It then sets each dropped file with these selected Tag(s). The dropped files are not moved out of this folder, per your requirements, but proper Folder Action implementation recommends they do not remain in the drop folder.



I have tested this on Yosemite and macOS Sierra without issue. Works as it should. With the exception of your specific folder name, you copy/paste the entire AppleScript below, into an Automator Run AppleScript action — after you have selected the default content, and removed it. How to configure in Automator was described in a similar post recently.
Save the Automator Folder Action (e.g. selTags), and selTags.workflow will be written into your ~/Library/Workflows/Applications/Folder Actions location. You can open this workflow using the Finder secondary menu's Open With : Automator, or by accessing Automator's Open Recent menu.
AppleScript:
-- select_tags.applescript
(*
Automator Folder Action using Run AppleScript action.
Drag and drop files on folder assigned to this script, and a list of known Tag names
will appear allowing assignment of single, or multiple tag names to all dropped files.
The requirements for this folder action chose not to move the post-processed files
to another external folder location.
Any subsequent Tag name changes on the folder items should be performed
interactively via the secondary Finder Tags... menu item.
Requires Yosemite 10.10 or later.
Tested: El Capitan 10.11.6, macOS Sierra 10.12.6
Version: 1.1
Author : VikingOSX, 2017-07-29, Apple Support Communities
*)
property ca : current application
-- this file only exists if you created custom Finder Tag names in Finder Preferences.
property tagFile : POSIX path of ((path to home folder as text) & "Library:SyncedPreferences:com.apple.finder.plist") as text
property tagKey : "values:FinderTagDict:value:FinderTags"
property PERLCMD : " | perl -lne '$_ =~ /^.*n = (.*?)$/ && print \"$1\"' "
property lprompt : "For multiple tags, press ⌘-key, and click names."
property allTags : {}
use framework "Cocoa"
use AppleScript version "2.4" -- Yosemite 10.10 or later required
use scripting additions
on run {input, parameters}
-- if custom tag names were created in Finder this file will exist
if exists (tagFile) = true then
set allTags to paragraphs of (do shell script "/usr/libexec/PlistBuddy -c \"print " & tagKey & "\" " & tagFile & PERLCMD)
else
-- no custom tag names exist, so get default Finder tag names
set allTags to (ca's NSWorkspace's sharedWorkspace()'s fileLabels()) as list
end if
set selTags to {}
set selTags to (choose from list allTags with title "Tags Selection" with prompt lprompt default items "" with multiple selections allowed without empty selection allowed)
if selTags is false then
display alert "User pressed cancel, quitting." as critical giving up after 10
end if
repeat with anItem in input
set_tag(anItem, selTags)
end repeat
return
end run
on set_tag(theFile, atag)
-- place single, or multiple tags in atag on the specified file
set tagArray to ca's NSArray's arrayWithArray:atag
set fileURL to ca's |NSURL|'s fileURLWithPath:(POSIX path of theFile)
fileURL's setResourceValue:tagArray forKey:(ca's NSURLTagNamesKey) |error|:(missing value)
return
end set_tag