The Committee's report also recommends that all single-use coffee cups are recycled by 2023, and if this isn't in effect by then that there is an outright coffee cup ban.
"The revenue should be used to invest in reprocessing facilities and 'binfrastructure" to ensure that the remaining disposable cups are recycled'. Half a million cups are thrown away every day, with nearly all of them incinerated, exported or landfilled.
Labour MP Mary Creagh, chair of the committee said: "Coffee cup producers and distributors have not taken action to rectify this and the government has sat on its hands".
Chains Pret A Manger, Costa Coffee, Caffe Nero and Greggs alongside USA firm Starbucks are among the biggest coffee-sellers in Britain and have rapidly expanded in the last 10 years to meet increasing demand.
Additionally, it said that producers needed to pay more for packaging that proved hard to recycle, and that labeling needed to be improved so that consumers knew how to properly dispose of their cups.
Fiona Nicholls, oceans campaigner for Greenpeace UK, said: "It's only if we take these necessary steps that we might be able to limit plastic waste to a level where we can recycle it all". "We're calling for clearer labelling so people can make informed choices about their use and disposal of coffee cups".
Coffee chains have been "pulling the wool over the eyes" of customers by letting them believe paper cups can be recycled, MPs warned.
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"Taxing the morning coffee run will not address the issue of litter, but it will hurt consumers and impact already struggling High Streets".
The full report, titled "Disposable Packaging: Coffee Cups", can be read on the EAC's website.
Some coffee chains, including Costa and Pret a Manger, have introduced discounts for customers who bring their own cups to be filled.
Gavin Ellis of environmental charity Hubbub said: 'Most consumers would look at that [symbol] and think if they put that in their mixed recycling bin that it will get recycled.
MPs said: "It is unacceptable that coffee sellers are perpetuating customer confusion though their use of recycling labels and emphasis on the recyclability of coffee cups, despite the shockingly low recycling rate", the report said. Cafes with in-store recycling systems should print their cups with "recyclable in store only", the MPs add.
It is time to do something similar with coffee cups.
The Marine Conservation Society (MCS) said it welcomed Friday's recommendations from the Environmental Audit Committee.