A 25p "latte levy" should be placed on disposable coffee cups and all must be recycled by 2023 or face being banned altogether, say MPs.
Mary Creagh MP, chair of the committee, says the UK's coffee shop industry is "expanding rapidly", so it's necessary to take action now to kickstart a "revolution" in cup recycling.
The 25 pence charge would go towards improving Britain's recycling and reprocessing facilities, the report said.
The Environmental Audit Committee believes that all disposable coffee cups should be recycled by 2023.
In October previous year, organisations from across the paper cup supply chain signed an agreement with the Alliance for Beverage Cartons and the Environment (ACE UK) to accelerate UK recycling of PE lined paper cups (see letsrecycle.com story).
'Coffee cup producers and distributors have not taken action to rectify this and government has sat on its hands. It's also been suggested that the cups be phased out, with a full ban by 2023.
"Prevention remains the best environmental option and as a minimum, CIWM would like to see renewed efforts by coffee retailers to promote reusable cups to their customers and a government-backed voluntary agreement might be a sensible first step".
U.S chain Starbucks will trial a 5 pence levy at up to 25 London branches in February for three months.
"Creagh said: "Coffee shops have been pulling the wool over customers" eyes, telling us their cups can be recycled, when less than one per cent are".More news: Panamanian vessel probed over suspected oil supplies to N. Korea
However, the difficulties surrounding the recycling of coffee cups are manifold: not only are recycling capabilities limited but the majority of cups go straight into the general waste. Fewer than 1 in 400 cups is recycled, largely because their plastic linings make recycling trickier.
The MPs point out that while some coffee shops offer discounts for customers who bring their own cup, only 1 to 2% of coffee drinkers respond.
"Taxing the morning coffee run will not address the issue of litter but it will hurt consumers and impact already struggling high streets".
However, due to their plastic lining, customers who put them in the recyclable waste effectively contaminate it.
David Palmer-Jones, CEO of SUEZ recycling and recovery, remarked that while the tax may be helpful, it has to be part of a wider reform that "shifts the burden of responsibility for all forms of packaging content, recyclability and ultimately their collection, back to the producer".
The Marine Conservation Society (MCS) said it welcomed Friday's recommendations from the Environmental Audit Committee.
In addition, the committee also has suggested that the government should set up a producer responsibility compliance fee structure that rewards packaging design which facilitates recycling and puts a fine on packaging, which is hard to recycle.
The government plans to produce a new plastics policy later in the year.
"Most people are shocked and dismayed to hear that coffee cups are not recycled". This is strong stuff, but in the meantime - with 2.5 billion coffee cups being dished out yearly - we need to make sure this happens sooner rather than later.