It is quite typical for managers to delegate projects/efforts/initiatives to a subordinate for the express purpose of giving them an opportunity to develop and demonstrate the skills they will need in a future position/promotion.
If I assigned a stretch opportunity to one of my direct reports and their response was that they needed a promotion before they would do that work, that would be strong evidence that they were not going to be progressing anytime soon.
The company has to decide if they want some people to permanently hold positions beyond their capabilities (Peter Principle), some people to temporarily hold positions below their capabilities (while working towards a promotion), or if they want to regularly demote people who aren't able to do their job.
Demotions absolutely kill morale, as does having a bunch of unqualified people in high-level positions. The least bad option is to require people to do the work of the position they want to hold.
lol